Beer, Alcohol & Liquor Luxury Tax

Alcohol Taxes

Mar 19th, 2010, in IM Posts, Opinion, by Ross

View the original article here.

23 Comments on “Alcohol Taxes”

Chris Says:
March 19th, 2010 at 8:06 am
Q: Why won’t the prices of liquor decrease?

A:

Jimmy Gani, president director of PT Sarinah, the nation’s sole liquor importer,

Clearly, he can charge whatever price he wants because there is no competition.

I thought monopolies were common during of the Soeharto New Order, not these days…
ET Says:
March 19th, 2010 at 10:57 am
Not much of a problem anyway as long as you have a trustworthy supplier of homemade arak.
deta Says:
March 19th, 2010 at 1:51 pm
Cutting the luxury tax with the consequence of lower alcoholic beverage price, beside resulting in the reduction of state income, will also likely create an external pressure because other countries do the opposite to lower the people’s consumption of liquor. This is probably the reason why the import duty is going to be increased to compensate this tax cut. Different title, but the result is sama saja.
ZZZBRILJANT Says:
March 19th, 2010 at 3:39 pm
Lowering the tax on alcohol would certainly not be any social
problems, then there is no alcohol culture in Indonesia, some would
probobly test when it is cheaper, but it is a transient problem.
Ross Says:
March 19th, 2010 at 3:39 pm
I’m reminded of a potato shortage in the UK in the 70s.
Prices of fish n chips rocketed, but when the spuds began to flow again, the chippers refused to bring prices down.
It became a permanent increase, because they knew the masyarakat would pay any price, bear any burden, for their fave food.
Wicked face of capitalism!
Dikkiman Sujengkol Says:
March 19th, 2010 at 4:14 pm
Ross,

It’s all economics – it’s called revealed preference. It’s all about information, nothing to do with morality. Same here. The real problem is licensing – the government’s artificially controlling supply (of hard liquour), if they issued more, the price would come down. Speaking of potatoes, there was a time in the 1700s in London when gin was cheaper than clean water.
Oigal Says:
March 20th, 2010 at 12:29 pm
It’s all economics – it’s called revealed preference

Laugh, notes from the bookstore again Assmad.

In fact, by increasing the tax to the absurb levels (whilst leaving the product legal) based on a complete ignorance of market forces all the goverment has done ensure the development of very slick and professional blackmarket and ensure they lose their cut.

The black market currently supplies a better product at superior pricing. There is a fine line before the risk of avoiding tax becomes an acceptable business risk managed option. No one but a few tourists (fewer by the year thanks to this kind of nonsense) pay the goverment price for grog. Want a case of the best wine, scotch just let your local black trader know and best yet they deliver.
ZZZBRILJANT Says:
March 20th, 2010 at 1:57 pm
Do not understand, Muslims do not drink alcohol, so what is the problem, the other 5.8 billion people not muslim like a drink, world population is approximately 6.78 billions of people right now.

ok I know 50% of them Muslims make use of alcohol so it be 6,3 billion who like it.

how many of those 69 million Indonesian Muslims are over 21 years now. 230% 60 = 138 to 138 / 2 = 69 million
berlian biru Says:
March 21st, 2010 at 7:59 am
“they knew the masyarakat would pay any price, bear any burden, for their fave food.”

I thought I would have found myself in that position, willing to pay whatever the price just to be able to relax with my favourite tipple, however even I have reached breaking point.

It has been a cardinal factor of my life that I like to relax in the evening with a bottle of wine, nothing fancy, just a cheap bottle of Aussie or Kiwi plonk will do me rightly, the sort of thing that retails back home for about a fiver a bottle. I watched the prices steadily increase over the past few years and gritted my teeth and blocked my ears against the cavils of my missus but no longer. I was in a bottle shop in Kemang the other day, one offering a big sale, up to 70% off some wines. The cheapest bottle I could find was a bland, non-descript Australian chardonnay at 285,000 Rps., I gulped hard, I did the mental arithmatic and then did something I have never done in my life before, I walked out of a booze shop empty-handed.

It will have no benefit for my health by the way, quite the contrary, because Indonesia does not tax on alcohol content but on fluid content a bottle of spirits is slightly cheaper than the wine, so now instead of a nice life affirming glass of wine, redolent of the warm Autumn slopes of some South Australian vineyard I will instead be easing away the cares of the day with the bitter fruits of the barley or juniper berry, with all the unpleasantness that entails.

As regards the punitive taxation of drink, I do wish people would stop trying to re-invent the wheel, it’s all been done before. William Pitt the Younger took over a British Exchequer most of whose activities involved trying to stamp out smuggling on England’s southern coast as British drinkers sought to avoid the astronomical excise put on Port and Wine from France. By reducing tax to 15% in one blow he wiped out the smuggling trade while at the same time increasing massively tax revenue as the people immediately switched to the legally imported stuff.

It’s not rocket science Sri my love, give it a try, you’ll be pleasantly surprised by the results.

I think it should be pointed out that apparently PT Sarinah’s monopoly days are coming to an end as I believe as many as eight companies have now applied for import licences so maybe the long two year drought might finally be coming to an end.
Ajay Says:
March 21st, 2010 at 11:00 am
I have a feeling salaries of PT Sarinah’s management will increase significantly.
Ross Says:
March 21st, 2010 at 3:13 pm
yes, Berlian, I to was shocked by te price of decent wine when I tried it a while ago. Went into Permata Hijau, staggered (not by the effects but the prices) but got one anyway, and they kindly suggested we try it.
Sat down, had a glass, then they hit me with an extra fee for sampling the wine I’d already agreed to buy!
Rip-off, never again!
ZZZBRILJANT Says:
March 21st, 2010 at 3:51 pm
Swedish national alcohol policy

http://www.sweden.gov.se/sb/d/2901/a/16516

http://www.thelocal.se/24478/20100120/
Odinius Says:
March 22nd, 2010 at 6:03 am
A bottle of Jim Beam for RP125,000?? That’s actually quite cheap!
Ross Says:
March 22nd, 2010 at 9:54 am
Sorry, Odinius, should have said Rp.130000!
ET Says:
March 22nd, 2010 at 12:36 pm
Sat down, had a glass, then they hit me with an extra fee for sampling the wine I’d already agreed to buy!

Reminds me of when I had to pay 1.000 Rp extra for ordering a tea without sugar.
Odinius Says:
March 22nd, 2010 at 11:11 pm
My fault on the number…but that’s still cheap.
Ross Says:
March 25th, 2010 at 12:38 am
So excise duty is up threefold. So says the news, and up goes the booze!
deta Says:
March 25th, 2010 at 8:06 am
Maintaining the state revenue and protecting health were mentioned as the reasons on JakartaGlobe. Don’t understand how it deals with the black market problem, though. Or probably after doing some re-calculations they just realized that the income contribution from this industry is so high that they’d better forget the initial purpose of scrapping its luxury tax?
Oigal Says:
March 25th, 2010 at 11:25 am
Another poorly thought out, irrational move. Still keeps the black market in business and as we all know, that is what builds the mansions around town.

There must have a number of officials fairly quaking at the loss of dodgy income when the luxury (call that for homes it buys for those with snouts in the trough) tax came off. Still they lobbied well and retained the status quo.
Harry O Says:
April 5th, 2010 at 12:09 pm
Anyone know where you can purchase beer brewing kit in Jakarta???
Suryo Perkoso Says:
April 16th, 2010 at 4:57 pm
Harry, you can purchase them from me….
My Cider has also proved to be a huge hit, last batch hit 12% and was as fine as virgins water. As for protecting health, they want to try banning shite like happy soda and other assorted syrups and gunges. Just take a look at a local pizza hut plastic cheeze topped cardboard bathmat, they even coat that in HFCS.
Ross Says:
April 17th, 2010 at 12:25 am
Good to see there are matters on which Suryo can talk knowledgeably and public-spiritedly.
But he’d best beware the excise-man!
ks Says:
May 6th, 2010 at 8:49 pm
hi Suryo, do u sell the likes of coopers microbrew kits? or something that you put together on your own? i would like to get in touch with you, especially if you have knowledge on beer brewing (which i lack). it would be too much hassle to bring a kit home from where i am now as it is kind of bulky.

thanks