JAKARTA (TheInsiderStories) - The Indonesia government mulls a plan to raise the import tariff of tobacco from 5 percent to 60 percent, which is seen as a move by the government to restrict imported tobacco.
Cigarette Producer Partners (MPS) chairman Djoko Wahyudi rejects the planned rise as because currently, the tobacco production could not meet the industry needs. According the Agricultural Ministry, the local farmers only produce 200,000 tons in a year while the cigarette industry needs 400,000 tons in year.
“Currently, the national tobacco is only able to meet 50 percent of industry demand,” he said after meeting with the government couple days ago.
He asked to the government to boost local tobacco first before imposing the higher import duties, which could lead to a decrease in cigarettes production. At the end, the government would lose revenues, especially from cigarette excise, which is targeted to reach Rp149.9 trillion or equal 10 percent of total revenues of the 2017 State Budget.
Meanwhile, speaking to The Insider Stories, the Head of Revenue Policy at the Finance Ministry Goro Ekanto said he is reluctant to discuss tobacco import duties because tobacco law was initiated by Parliament. From government side, the Health Ministry would lead the team, not the Finance Ministry.
However, from the government perspective, the consume of cigarettes must be controlled for health reason through tax while at the same time, the government is still considering the cigarette industry to still contribute multiplier economy effect, including create jobs for million of people. (*)