Indonesia’s government plans to expand the country’s tobacco excise tax structure with additional tax tiers this year, according to Finance Minister Purbaya Yudhi Sadewa. The proposal remains under discussion with the House of Representatives, but the minister said implementation would proceed after budget deliberations are completed. The government has said the additional tiers are intended to reduce illicit cigarette circulation and increase state revenue.
The plan has faced criticism from public health and civil society groups, which argue that adding more tiers to Indonesia’s already complex tobacco tax system may not effectively address illegal cigarette sales. Indonesia currently has eight excise tax groups covering machine-made and hand-rolled kretek cigarettes, and industry observers have called for simplification rather than expansion. Supporters of reforming the structure say a more balanced approach is needed to limit illicit trade while maintaining government revenue from the legal tobacco market.
