Indonesia’s new tax hike on alcohol
DENPASAR – Shortages of alcoholic beverages, and the high cost of drinks, especially wine, are set to increase in Indonesia in the wake of a new government tax hike.
The government is effectively replacing the luxury tax on alcohol with a higher rate of excise tax, industry players said.


Just over a week after the government said it would scrap the luxury tax from April, the Finance Ministry this week released a decree that raised the excise tax on alcoholic drinks by 100 percent to 214 percent, depending on the alcohol content. 


Krisnadi, chairman of the Indonesian Hotels and Restaurants Association, told the Jakarta Globe that the move would trigger more black market trading of alcoholic beverages. 


“Based on my understanding, the government was cutting the luxury tax for alcoholic beverages to make the [liquor] price cheaper in the market,†he said.
“But now that they’ve decided to increase the excise tax for alcoholic beverages it will lead to the same old problems for retailers, such as inadequate supplies and high prices.â€


Prior to the removal of the luxury goods tax and the increase in the excise tax, many alcoholic drinks cost as much as 500 percent more than their wholesale price by the time they were sold in bars and restaurants.
Such high prices led to a growth in illegal imports. 


Ipung Nimpuno, a representative of the Indonesian Malt Beverages Association, said that the increase in the excise tax could cause prices of alcoholic beverages to soar by 20 percent to 40 percent. 


Ian Jarrett
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