January - February 2020 ISSN: 0193 - 4120 Page No. 14709 - 14713 14709 Published by: The Mattingley Publishing Co., Inc. Luxury Car Sales after Taxes Reduction: Indonesian Market Experience Vierly Ananta Upa Accounting Study Program, Universitas Pelita Harapan Kampus, Surabaya, Indonesia Email: vierly.ananta@uph.edu Article Info Volume 82 Page Number: 14709 - 14713 Publication Issue: January-February 2020 Article History Article Received: 18 May 2019 Revised: 14 July 2019 Accepted: 22 December 2019 Publication: 28 February 2020 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. Keywords: Luxury car, Sales, Taxes, Indonesian market. I INTRODUCTION Various ways are done by the government to attract people to pay taxes. One of the government's efforts is to reduce or eliminate the tax rate. Reduction or elimination of luxury goods tax rates can affect people's consumption patterns. In February 2018 then on the Republika website (2018), the Minister of Finance agreed to abolish the sales tax on luxury goods in the sedan. In addition, in the Detik website (2019), the Minister of Industry said the government would impose a 0% import duty and reduce luxury goods tax on hybrid cars. Both of these government policies are expected to increase investment in Indonesia, especially in the automotive industry. However, this policy can lead to different perceptions among the community. Some people agree with government policies. In the Media Indonesia website (2018), it was revealed that the tax abolition policy on the sale of luxury goods in sedans was considered to reduce the price of sedan cars so they could increase sales. However, some people did not agree with the policy because it was considered not to influence the sedan market in Indonesia. In the Bisnis website (2018), Director of Marketing & After-Sales Services of PT Honda Prospect Motor, Jonfis Fandy said that he had not seen the prospect of sedan as a four-wheeled vehicle capable of becoming a volume maker in the domestic market.