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Jakarta, CNBC Indonesia – The government has explained that it is considering an increase in the excise tax rates on cigarettes by an average of 12.5% that is expected to be effective as of next February.
The Director General of Customs and Excise, Heru Pambudi, relayed that there are at least five reasons for the government to increase the excise tax on cigarettes in 2021. The five reasons include health considerations, direct and indirect work in the tobacco industry that affected by this policy, tobacco producers must consider the impact of the appearance of cigarettes. and the contribution of cigarette revenues to the state budget.
According to Heru, the first factor is in terms of health. With the new special tariff, at least the price of cigarettes could increase by 14% over the current market price.
“In terms of health, the excise tax is a fiscal instrument to control consumption. If what we control is cigarettes, it means that it is related to health. The objective is how we become healthier every day, what are the indicators ? From the instrument of success, it certainly is better, if prices are going up, affordability is improving. Difficult, “Heru said in a special interview with CNBC Indonesia on Thursday (10/12/2020).
Next, it is in terms of direct and indirect labor that is affected by this policy. Starting with the farmers, the workers in the tobacco industry. For direct workers, in the sense that those who work only in cigarette factories, the number is 158 thousand.
Meanwhile, there are 526 thousand tobacco producers. This factor has also been converted into the government’s calculation so there will be no layoffs if this excise regulation is applied.
“Therefore, the government really needs to be careful, especially in a situation like this that is difficult and then layoffs happen. Farmers are also the same, the supply chain related to the cigarette industry, should draw attention.” Heru added.
The fourth reason, the increase in excise duties should also anticipate the circulation of illegal cigarettes. “Each increase in tariffs has the potential to cause violations in the form of illegal cigarettes, whether on fake tapes. The higher the excise duty, the potential for illegal cigarettes to increase. This must be regulated,” he explained.
Finally, Heru said, the government should also consider the contribution of cigarettes to the State Budget (APBN), which is estimated to contribute 173 trillion rupees next year.
“These five must be carefully considered by the government,” he said.
For this reason, the Ministry of Finance, in this case the Directorate of Customs and Special Taxes and the Fiscal Policy Agency (BKF) will always listen to and see the developments of this policy, including receiving input from various parties.
“There is a lot of input, from all parties, from institutional organizations. Dozens of incoming letters, we translate them into a harmonious point,” said Heru.
