Indonesia will scrap a 5-10% additional luxury tax that was to apply to car sales to try to boost the industry, finance minister Sri Mulyani Indrawati said reportedly said on Thursday.

The new tax had yet to take effect, officials told Reuters, which added it had been proposed by an industry minister who was sacked in a cabinet reshuffle earlier this month.

"We will revoke the government regulation on the additional luxury tariff on cars," Indrawati told Reuters.

She reportedly said the move should boost car sales. Local media have said that before the additional tax, the previous luxury tariff was set at 10-75% of a vehicle's sale value.

The report said new car sales in Indonesia fell 26% in November compared with the same month in 2004 due to rising interest rates and a sharp increase in domestic fuel prices.

According to Reuters, PT Astra International Tbk , controlled by Singapore's Jardine Cycle & Carriage, has said 26,121 new cars were sold in the country in November, bringing the year-to-date national sales to 501,042 units.

Astra is the distributor for various car brands, including Toyota, Daihatsu, Peugeot, BMW and Isuzu and its sales accounted for nearly half of total car sales in Indonesia this year, the report added.