Government to Increase Tax on Exported Leather
Tuesday, 30 January, 2007 | 16:59 WIB

TEMPO Interactive, Jakarta: The government will increase the tax on exported leather from the previous 15-20 percent to 25-35 percent.

The policy is being taken to maintain the availability of domestic leather supplies.

Ansari Bukhari, Director General of Metal, Machineries, Textile and Multifarious Industries, said that today shoe industries are complaining over the lack of supply of raw materials albeit the government having already assessed the taxes on exports.

According to him, should taxes on exports be raised, there will be more hide manufacturers who sell their products to domestic consumers.

Ansari explained that the purpose of the export tax increase was to stop leather products from being exported so that tanning and industries that use hide will improve.

For the time being, said Ansari, his directorate will prepare a study and coordinate with the Department of Finance.

“So, there are still more stakeholders that must be convinced,” he said.

Earlier, the government had applied taxes on exported leather of up to 55 percent.

However, following the economic crisis, the policy was revoked at the request of the IMF.

Today, the government applies export tax of no more than 55 percent, which is aimed at avoiding any price manipulation between consumers and the tanning industry.

Diyono Hening Sasmito, Head of Indonesian Tanning Association, had said that low export levy has resulted in domestic processing industries experiencing a lack of raw materials.

As a result, the capacity of domestic fixed processed products was not optimal.

Consequently, downstream leather-based manufacturing companies have become uncompetitive.

MUHAMAD FASABENI