THE STATE MIGHT LOSE RP 700 BILLION EACH YEAR

The Government’s plan to impose tax on carbonated soft drink (CSD) was rated by the Board of Economy and People’s Research, Faculty of Economy, the University of Indonesia (LPEM FE UI) might cause the state to lose more than Rp 700 billion per year if the Government exercised their plan to increase tax of Rp 3.000 per liter on CSD in the hope to increase tax income of Rp 590 billion per year.

Tax tariff of Rp 3.000/liter would increase product (CSD) price by 37,8% and the increase would reduce CSD sales by 64,9% which would reduce Government’s income from Value-Added Tax (PPn) and Company Tax.

“PPn would be reduced by up to Rp 526 billion and company’s tax would be reduced by up to Rp 736.1 billion. Total downturn of Government’s income would reach Rp 1,3 trillion” Head of Survey team of LPEM Eugenia Mardanugraha told Business News (5/2).

LPEM also calculated that the Government would have to bear the cost of new tax collection. Total cost of new tax collection was Rp 74,7 billion. “If the Government compared income calculations, in the end the Government would loose Rp 783,4 billion” Eugenia was quoted as saying.

National economy would weaken due to lessened income and public enrichment if tax were imposed on CSD. Tax tariff of Rp 3.000/liter on CSD would reduce product sales by up to Rp 5,6 trillion which would finally reduce total production of Indonesia’s economy by Rp 12,2 trillion. “The CSD industry would have their direct impact on the industries of chemicals, glass bottles, plastics, refrigerators and logistics and transportation.” Eugenia remarked.

Tax tariff of Rp 3.000 on CSD would reduce Government’s income from indirect tax amounting to Rp 710 billion. Public income was predicted to lessen by up to Rp 1,56 trillion which would downpress consumers’ purchasing power as a whole. “Predictably more than 80,000 people would lose their jobs if new tax tariff was imposed on CSD” Eugenia said.

Previously it was reported that DPR had asked the Government to review the plan impose tax on carbonated soft drink and consider the implications. According to Head of Commission XI of House Emir Moeis, it was advisable for the Government to make in-depth analysis. “Do not apply tax on a product just by copying other countries who had sooner applied such policy” Emir disclosed to Business News sometime ago.

The Government was asked to initially consider the implications of imposing tax on CSD on the local industry. The Government must also consider the faith of local industry and home industry which also produced carbonated soft drink and even using coloring agents. “The Government is advised to be careful in imposing tax and determine the amount of tax on a certain product because in the end taxes would burden consumers who are the public.” Eugenia concluded.

Business News - February 08,2013