Indonesia raising excise with one eye on jobs

Indonesia’s biggest cigarette producer, PT HM Sampoerna, has supported the government’s decision to keep the excise levy on hand-rolled cigarettes (SKT) unchanged at Rp80 (US$0.01) per cigarette, according to a story in The Jakarta Post.

Sampoerna’s CEO Paul Norman Janelle said he appreciated the consideration the government had given to the impact tax policy had, especially on employees and farmers.

“It’s important that the government listens and in this case the government has listened especially in terms of SKT,” he was quoted as saying. “[The government] has been taking into consideration the livelihood of the clove and the tobacco farmers.”

The government announced an average increase in tobacco excise of 11.19 percent starting on January 1, after taking into account both the state of the cigarette industry and public health concerns.

The highest excise increase of 12.96 to 16.47 percent will be applied to machine-rolled cigarettes (SKM), while the lowest increase of zero to 12 percent will be imposed on SKTs.

Tobacco is the main source of excise revenue for Indonesia.