Manufacturers are calling on the Indonesian government to retract the 10% luxury tax it imposed in January on soft drinks, arguing that they should not be categorised as luxury goods.

A report by the Jakarta Post claims the government, which introduced the tax in an attempt to increase tax receipts, claims that soft drinks cannot be considered as basic commodities and are consumed by higher-income groups.

Mugijanto, chairman of the Association of Soft Drink Industries (ASRIM) said in a statement that all classes in society consumed soft drinks including packaged mineral water and carbonated beverages.

A recent survey carried out by the University of Indonesia, which covered soft drink consumers in eight major cities across the country, said soft drinks are consumed as frequently as snacks and ice cream, both of which are exempt from the luxury tax. It added that the luxury tax would only burden consumers on lower incomes.

The survey also claims that soft drink consumers had an average monthly income of less that US$109 and consumed soft drinks on a once-per-month to once-per-week basis.

Mugijanto said the imposition of the tax has resulted in lower sales due to falling demand, forcing manufacturers to reduce their investment, which in turn meant slashing their work forces.

"We hope the government will quickly cancel the luxury tax imposed on our products," he added.

Carbonates Report 2000 - Asia