Luxury Car Sales after Taxes Reduction: Indonesian Market Experience

Abstract

The elimination and reduction of taxes on certain types of goods have reaped various responses in the community, including luxury cars. Some people agree with the government policy, but there are also people who disagree. This study aims to explore the public response to the decline in sales tax on luxury cars. This study used questionnaires with 81 respondents. This study used linear regression model. The results of this study indicate that a decrease in tax rates does not affect the consumption of luxury cars. This is because luxury cars are still classified as tertiary needs for the people of Indonesia. In addition, the policy of reducing and eliminating sales tax on luxury goods has not been able to reduce the price of luxury cars in Indonesia because the income tax rate on imported goods and import duties is raised. The results of the study are expected to provide an overview of the effect of taxes on the consumption of the luxury car market in Indonesia