Indonesia: Mixed reaction greets cancelled plan to hike cigarette tax

• Nov 06, 2018

The government has canceled its plan to increase the excise tax for tobacco and tobacco products in 2019 and has also postponed its plan to simplify the tax, which has met with mixed responses from industry and consumer groups.  

The cancellation and postponement mean that the 2019 cigarette excise tax would not differ much from this year’s tax. The government made the decision last Friday during a cabinet meeting President Joko “Jokowi” Widodo chaired at Bogor Palace in West Java.

The National Kretek Preservation Committee (KNPK) welcomed the government’s move for “accommodating” the aspirations of stakeholders in the tobacco industry.

“The industry has been under pressure because of increases in the tobacco excise tax over the last few years,” said KNPK coordinator Azami Mohammad on Monday as reported by kontan.co.id.

Indonesian Consumers Foundation (YLKI) chairman Tulus Abadi criticized the government’s decision to cancel the cigarette tax hike, saying that Jokowi had no vision on public health. “This means that the government continues to allow people to be dependent on cigarettes,” he said as quoted by tempo.co.

Meanwhile, health experts have called for a more drastic increase in the tobacco tax to reduce smoking, including among school students.

The government had also initially planned to simplify the tobacco product categories and to increase the excise tax around 10 percent.

Different excise taxes are imposed on different tobacco products: a 10.9 percent tax on kretek (clove cigarettes), 13.5 percent on rokok putih (tobacco cigarettes) and 7.3 percent on handmade cigarettes. 

The tobacco tax contribution to this year’s state revenue increased by around 10 percent. (bbn)

Source: http://www.thejakartapost.com/news/2018/11/06/mixed-reaction-greets-cancelled-plan-to-hike-cigarette-tax.html