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View all search resultsCigarette makers reject govt plan to raise excise
The Association of Indonesian Cigarette Producers(GAPPRI) has objected to the governmentâs plan to raise cigarette excise dutyby 10 percent next year, as it would boost costs and threaten their businessprospects
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T
he Association of Indonesian Cigarette Producers(GAPPRI) has objected to the government's plan to raise cigarette excise dutyby 10 percent next year, as it would boost costs and threaten their businessprospects.
Fiscal Policy Office head Andin Hadiyanto recently said the increase in cigarette excise would be introduced to meet the 2015 state budget revenue target of Rp 120 trillion (US$9.81 billion) from cigarette excise duty.
GAPPRI chairman Ismanu Soemiran said the plan would force many cigarette manufacturers out of business as higher excise would exacerbate the industry's already bleak prospects.
In 2013, cigarette production fell by 7 percent from an increase of 9 percent the previous year. Meanwhile, the Finance Ministry's customs and excise directorate general estimates that cigarette production will grow by only 3 percent this year. 'Production has decreased in the last three years, especially due to the government introducing very high cigarette excise duty, as well as the required pictorial warnings as stipulated in Government Regulation No. 109/2012,' Ismanu said as quoted by tribunnews.com on Friday.
According to him, several manufacturers, primarily those that produced hand-rolled cigarettes and mid-sized machine-rolled cigarettes, closed down their facilities and laid off thousands of workers in the first quarter of this year due to the fall in production. 'The layoffs will continue until the end of next year,' Ismanu added.
In order to prevent further negative impact, Ismanu said his association proposed that the government raise the excise duty by only 5 percent to meet next year's revenue target of Rp 120 trillion based on an assumption of 3.3 percent production growth. He added that the 5 percent increase would help the government meet its target if it also increased the retail sales price per cigarette, which has been the same for two years.
