Earlier this week, Indonesia’s Finance Minister Purbaya Yudhi Sadewa said that any increase in tobacco excise must be paired with safeguards for workers, warning that steep hikes could push the sector into decline without social protection programs. “You can’t kill the industry unless there’s a program to absorb the displaced workforce,” he told reporters, noting the risk of mass layoffs if cigarette excise rates rise too quickly.
While higher taxes are designed to cut smoking rates and boost state revenues, Purbaya stressed the need for transition planning. He said he would review the condition of East Java’s cigarette industry and study the growing illegal market, which he warned is eroding legitimate businesses. The finance ministry is also investigating counterfeit excise stamps, which Purbaya believes could be costing the state significant revenue.
Deputy Finance Minister Anggito Abimanyu confirmed that the 2026 excise tariff remains under review. Lawmakers recently agreed to raise the government’s 2025 customs and excise revenue target to Rp336 trillion ($19.7 billion), up from Rp334.3 trillion. Final details of next year’s tobacco tariff will be determined after an evaluation of this year’s performance.
