JAKARTA (TheInsiderStories) - Indonesian government decided to raises the cigarette tax in average 12.5 percent starting 2021. In details, class A machine white cigarettes jumped by 18.4 percent, type 2A up 16.5 percent, and the 2B type lift up to 18.1 percent.
While, the tariff adjustment not implemented for the hand-rolled ‘kretek’ cigarettes as this category involved huge labor element. Finance minister, Sri Mulyani Indrawati told reporters today (10/12), the reasoned her ministry took the decision, caused number of smokers increased among women from 2.5 percent to 4.8 percent and among children up from 7 percent to 9 percent.
She conveyed, the adjustment calculated based on the weighted average number of production of each type and group. In addition, there were five aspects that the government had paid attention like the consumption, labor, farmers, illegal cigarettes, and the state revenues.
The government has hike the cigarette tax four times. In 2015, the country raised the excise by 8.72 percent, in 2016 11.19 percent, 2017 10.54 percent, and 2018 10.04 percent. Initially, the government planned to increase the cigarette tax again by 23 percent in this year.
But, do various reasons, Indonesia not run the program. With the policy, is estimating the average retail selling price of cigarettes to lift by 35 percent from the current selling price. The minister assured that with the new policy, the government could maintain the tax revenues.
The trend of increasing cigarette excise tax rates also occurs in other hemisphere countries in the world. In fact, the increase in excise duty and the selling price of cigarettes has been more rapid in the Organization for Economic Cooperation and Development (OECD) countries.
The OECD reports that the total excise tax burden on cigarettes has reached 50 percent of the selling price to consumers in almost all the member countries. the director Pascal Saint-Amans stated, “There are even eight countries with an excise tax of 80 percent of the price of cigarettes.”
Some of them are like France, Chile and Finland. Countries such as Luxembourg, Portugal, the Netherlands, and the United Kingdom also raised excise tariffs for tobacco products. In Australia, since July 1, tobacco importers are required to pay import duties and import taxes before goods can be entered and stored in warehousing (anti-tax avoidance).
Written by Editorial Staff, Email: theinsiderstories@gmail.com
