Leaders in Bali automotive sector are predicting that car sales will decline if the provincial government’s plan to introduce a progressive tax on vehicle ownership is introduced as planned in 2011.
The head of Astra International’s Diahatsu division in Bali, Oka Raidana, said the decision to apply a 1.5%-3.5% tax on the selling price of a vehicle for buyers owning more than one vehicle will negatively impact on the buying power of the public.
Said Raidana, “in addition to the progressive tax, the buying power of the public is also impacted by the introduction of a plan to limit government subsidies for premium grade gasoline.”
These conditions, he told the state news agency Antara, are likely to affect the number of new cars sold in Bali, with the size of that decline dependent on the final actual amount of tax imposed.
Of at least equal concern to the automotive sector, according to Raidana, are indications that the tax charged on the change of title ownership for a car will be increased by another 10%.
Meanwhile, the manager of the Denpasar branch of Auto 2000, Faris Henky Irawan, objects to the planned progressive tax, insisting it is the wrong way to try to reduce the overcrowding on Bali’s roadways. Irawan predicts that new rule will merely push people to “borrow” names of friends and family members when registering a new vehicle.
Irawan said the most effective way of reducing traffic congestion is to improve and expand the public transportation system on the island which, in his opinion, is completely inadequate to meet the public’s need.
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