• April 24, 2024

Tobacco taxes to rise 11 percent in Indonesia

The Indonesian government has announced an average increase in tobacco excise taxes of 11.19 percent, which will take effect on Jan. 1, 2016.

“The highest tax increase of 12.96 to 16.47 percent will be applicable to machine-rolled cigarettes, and the lowest increase of 0 to 12 percent will apply to hand-rolled cigarettes,” said the Finance Ministry’s director general of taxation, Heru Pambudi.

Heru said the government would not increase taxes on hand-rolled cigarettes in the III B group because of their slower production rate in comparison to machine-made cigarettes, according to a story in The Jakarta Post.

This year the Indonesian government set a target of Rp 139.12 trillion (US$10.29 billion) for tobacco tax revenue. In total, the excise revenue target listed in the 2016 state budget is Rp 155.52 trillion, which includes Rp 148.86 trillion from tobacco taxes and Rp 171.2 million from alcohol taxes.

Heru expressed his optimism that the government would reach its targeted cigarette excise revenue due to the upcoming regional elections, stating that “consumption usually increases” at regional election time.

Deputy Coordinating Economic Minister Edy Putra Irawady has said that in 2020, the government will no longer take tobacco taxes into account in the state budget, or the contribution of the tobacco-related industry to employment. According to Edy, by 2020 the government would have prioritized public safety over the economic impacts of the tobacco industry.