Taxing balancing act

Indonesia is to follow a policy of foreshadowing cigarette excise increases in such a way as to limit smoking while lessening the impact of any cigarette-sales reduction on tobacco-industry jobs, according to a story at en.tempo.co.

Finance Minister Sri Mulyani Indrawati said the Government had to address two concerns before issuing a regulation on cigarette excise: its impacts on health and the industry.

Sri Mulyani said that the use of tobacco by smokers, especially children, would badly affect their health in the future; so the Government imposed excise on tobacco products in a bid to lessen its consumption.

However, on the other side of the coin, the tobacco industry employed a large number of workers, including tobacco and clove farmers.

Speaking before millennials at a Youth Engagement event at Balai Sarbini, Jakarta, Sri Mulyani implied that, given these circumstances, it was difficult for the Government to decide whether to prioritize individual physical health or economic health.

Therefore, she said, the Government planned to gradually increase taxes based on the roadmap of tobacco excise, which would provide “a signal to the tobacco industry and regional administrations”.

At the same time, Sri Mulyani said, the Finance Ministry, through the Customs and Excise Directorate General, would strive to reduce the illegal trade in cigarettes.

In 2017, the illegal trade was said to have accounted for 10.9 percent of the cigarette market, a figure that fell in 2018 to 7.03 percent.