The government has increased its target of excise revenues for this year by approximately Rp 1 trillion (US$111 million), Finance Ministry’s excise director Bachtiar said Tuesday.
Bachtiar said Finance Minister Sri Mulyani Indrawati had requested, on his inauguration day as the new excise director, to reach a revenue target of Rp 58.3 trillion, or up by Rp 1 trillion from Rp 57.3 trillion stated in the draft for the revision of the 2010 State Budget Law.
The newly installed director said excise revenue was generated from cigarettes and liquor, but
failed to explain whether the increased target came from the goods category and what the government’s argument was for setting a higher bar.
Indonesia collected more than Rp 54 trillion in revenue from excise in 2009. Cigarette excise accounts for 98 percent of excise revenue.
The government has effectively increased excise tariffs on cigarettes and liquor since Jan. 1 and April 1, respectively.
The excise tariffs on cigarettes, a Finance Ministry regulation of which was issued on Nov. 16, 2009, range from Rp 65 per stick to a maximum of Rp 320 per stick, depending on whether they were hand- or machine-rolled.
On the other hand, the government has also imposed new excise tariffs on local and imported alcoholic beverages, with an increase of 200 percent on average.
The increases on liquor excise tariffs are likely to compensate for the removal of luxury tax on the item on the same day those new tariffs came into effect.
The Indonesian Hotel and Restaurant Association and the Indonesian Alcoholic Beverage Producers Association have strongly opposed the government’s decision on new excise tariffs on liquor, saying they would discourage tourists to visit the country and would cause more financial burden on alcoholic drink producers.
Meanwhile, Indonesian Tobacco People Alliance secretary-general Deradjat Kusumanegara, also present at the discussion, said cigarette makers had increased selling prices of their products “moderately”, but failed to provide further details.
“An excessive increase of prices will cause [market] volume to decline and [the number of] illegal cigarettes to rise,” he said.
Indonesia ranked in the top three cigarette consumers in the world and has a booming tobacco industry.
Based on 2008 data, the country’s cigarette companies had a combined revenue of more than Rp 80 trillion, and employed more than 600,000 workers directly and 10 million indirectly.
Indonesia is among the signatories of the historic tobacco control treaty under the Framework Convention on Tobacco Control along with 175 other countries, but has missed a deadline to ratify the treaty.
