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Taxes Can Drive You to Drink

Bali's Salak Wine Producers Encountering Problems in Dealing with High Excise Tax Rates.

(2/19/2011) Bali's distinctive snake-skinned fruit of Salak (Salacca zalacca) is much admired for its sweet and acidic taste, but perhaps less known as the basis for delicious wine that can be made from the fermented juice of the fruit.

In fact, salak farmers from the Karangasem region of Bali who have recently mastered the art of wine-making are being thwarted from increasing their income by the high excise tax imposed on alcoholic beverages.

According to Kompas.com, the salak farmers of Banjar Dukuh formed a company CV Dukuh Lestari in order to meet government regulations for beverage producers. The company's director, I Nengah Suparta, said that the enterprise has produced 1,000 liters of salak wine since last year, but have only been able to sell 300 liters because the required excise tax must be paid in advance. As a result of this situation, 700 liters of salak wine remains unsold and in storage.

Salak Wine or Anggur Salak contains 13.05% of alcohol making it a "Class B" beverage under a classification systems used by customs and excise department. This classification requires a Rp. 30,000 (US$3.33) excise stamp on each bottle which, when paid in advance, is beyond the financial power of the Karangasem wine producer who would need to front up Rp. 30 million (US$3,330) in prepaid taxes in order to get their wine to market.

The wine has proven popular with customers and Suparta is confident that, if given the opportunity, local farmers could produce and sell 5,000 liters of wine each year.

Sold in 750 ml bottles with a modern label, the wine is sold for Rp. 150,000 per bottle (US$16.60), including the excise tax charge.

Pleased with the popularity of the wine among foreign tourist visitors to Bali, Suparta says converting salaks into wine offers greater financial returns than selling salak as dried crackers (Keripik) or sticky cakes (dodol). The profit from each bottle yields Rp.15,000 (US$1.60), much more than the Rp. 5,000 (US$0.55) netted from each package of dodol or keripik. Salak wine brings the added benefit to farmers of a longer shelf-life than the confectionery products.

Four kilograms of salak are needed to produce one liter of wine.

The Banjar Duku area of Karangasem covers some 116 hectares of agricultural land with one hectare capable of producing up to four tons of salaks each year. Through extrapolation, Karangasem is able to annually produce 464 tons of salaks.