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Liquor producers question excise tax hike

Jakarta Post - December 18, 2018

Jakarta – Even as liquor producers are still struggling to recover from the impact of the market limitation that has been enforced since 2015, they question the government policy to increase the excise tax for the products, which they fear would further burden the industry.

The Indonesian Malt Beverage Industry Association (GIMMI) reported that the sales of the products have been going down following the implementation of Trade Ministerial Regulation No. 6/2015 on the limitation of liquor beverage distribution.

GIMMI executive committee Bambang Britono said the contributions to the state budget from excise taxes on group A liquor had declined by 6 percent annually since the implementation of the regulation issued in 2015 that prohibited liquor sales at convenience stores.

The new tariff is stipulated in Finance Ministerial Regulation No. 158/PMK.010/2018 on excise taxes for ethyl alcohol, ethyl alcohol beverages and ethyl alcohol concentrates.

Under the regulation, announced on Dec. 13, excise taxes for group A liquor beverages with an alcoholic content of up to 5 percent would increase to Rp 15,000 (US$1.03) per liter from Rp 13,000 per liter

"So I don't understand what is behind the excise tax increase. Usually, excise taxes are introduced as fiscal instruments to control growth," Bambang said on Monday. "So, the excise tax increase would only add more burden to the [liquor] industry."

Bambang said GIMMI had met with the Finance Ministry's fiscal policy agency to explain the impact of the regulation issued in 2015 that had hampered liquor beverage distribution at the retail level. Therefore, he added, GIMMI called on the government to delay the fiscal policy to give time for the industry to recover.

Koneksi Capital research head Alfred Nainggolan explained the excise tax increase would further affect the liquor producing companies because it would jack up prices and negatively affect sales

"I see that the alcoholic beverage industry would be similar to the cigarette industry, whose growth would only with difficulty reach double digits," Alfred added. (bbn)

Source: https://www.thejakartapost.com/news/2018/12/18/liquor-producers-question-excise-tax-hike.html