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Cigarette taxes to finance healthcare
Jakarta will have more in its vault to pay for healthcare services as the administration will receive billions of rupiah in revenue from cigarette excise as of next year
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akarta will have more in its vault to pay for healthcare services as the administration will receive billions of rupiah in revenue from cigarette excise as of next year.
The City Council on Thursday endorsed the Bylaw on tobacco tax in lieu of Law No. 28/2009 on local taxes and levies, the later of which stipulates the cigarette tax is 10 percent of its excise.
The 10 percent will be proportionally distributed to all 34 provinces based on population.
'Because our population is four percent of the national population and on the assumption that national cigarette excise is Rp 116 trillion, the city will receive around Rp 400 billion per year,' Jakarta Tax Office head Iwan Setiawandi told reporters after the council's plenary session.
The tax would be charged to producers and importers of the cigarettes and would be collected by the Finance Ministry.
The ministry, Iwan said, would distribute the tobacco tax to the regional administrations every three months.
As of October, the city has collected Rp 18.9 trillion in tax revenue, or 83.88 percent of the total tax revenue target of Rp 22 trillion.
The biggest income came from vehicle ownership transfer fees (BBNKB) and vehicle taxes. However, it is expected that tax revenue from those sources would decrease in the coming years as the number of motor vehicles decreases.
The Tobacco Tax Bylaw also stipulates that 70 percent of tobacco revenue must fund preventive and promotional anti-smoking programs.
'The Health Agency will manage the programs,' he added.
Governor Joko 'Jokowi' Widodo lauded the endorsement of the bylaw.
'It should be like that. The money collected from the tobacco tax should be used to finance [health programs],' he said.
He declined to give his opinion of the price of cigarettes in the country was too low.
'I have no idea. I don't smoke,' he said.
Jakarta has had the Anti-Smoking Bylaw since 2004. However, law enforcement was still far from perfect as many smokers still smoked in public places, such as public transportation, restaurants and air-conditioned buildings.
National Mandate Party (PAN) councilor Wanda Hamidah of Commission A overseeing administrative affairs, said the city aimed to tighten regulations as part of its anti-smoking campaign.
'We are expecting to increase the tobacco tax by 100 percent but it's not that simple because it is in the hands of the central government,' she said, 'the House of Representatives had previously set the limit: capping it at 10 percent.'
Wanda added that the price of cigarettes was too low, 'cigarettes [here] are the cheapest in the world.'
However, Wanda said, the city should, and could, control the number of smokers in the city through other policies, such as a draft a bylaw regulating non-smoking areas.
'Currently, designated anti-smoking areas are only regulated by a gubernatorial decree,' she said, adding that the draft could be discussed before the council's tenure ends in 2014.
Gubernatorial Decree No. 88/2010 was an amendment to a 2005 bylaw on air pollution control, which stated that people were not allowed to smoke in five types of facilities: public transportation, healthcare buildings, schools, children's areas and places of worship.
