Indonesian Finance Minister Purbaya Yudhi Sadewa said he had met with several illegal cigarette business owners to understand their concerns and discuss bringing them into the legal tobacco-excise system. The government is preparing an additional cigarette excise tier that Purbaya hopes will give illegal producers a pathway to legalize their operations. He said businesses that take the opportunity would be brought into the formal system, while those that continue operating illegally would face enforcement.
Civil-society groups argue that creating another excise tier will not necessarily persuade illegal producers to comply and could further complicate Indonesia’s already complex cigarette tax structure, which currently has eight bands. Critics also warn that a new, potentially cheaper cigarette category could expand the availability of low-priced cigarettes, increase consumption, and ultimately raise health-care costs.
