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Govt announces 10.54 percent cigarette excise hike for next year
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Finance Minister Sri Mulyani Indrawati makes remarks at the customs office in East Jakarta on Sept. 30. (Courtesy of Directorate General of Customs and Excise/File)
T
he government will increase cigarette excise and retail pricing for 2017, with an average 10.54 percent tax increment, which suggests an approximate retail price hike of 12.26 percent.
Finance Minister Sri Mulyani Indrawati announced that machine-made cigarettes would be imposed with the biggest excise increase of 13.46 percent, while handmade cigarettes would enjoy unchanged excise.
The handmade cigarette industry is a labor-intensive product, according to a University of Indonesia (UI) survey in 2013, citing the fact that 291,824 workers are involved in the sector. It equaled 75 percent of the total 401,989 labor force in the cigarette industry.
"We hope the policy will cause a positive correlation with revenue. The 2017 excise revenue target is Rp 149.8 trillion [US$11.49 billion] or 10.01 percent of total tax revenue. Local administrations and the public must support it [the policy]. A missed target will affect the budget and development," she said during her speech at the customs office in East Jakarta on Friday.
The 2017 excise revenue target has been set lower than previous years, where it was 11.72 percent for this year, 11.68 percent in 2015 and 12.29 percent in 2014.
On the opposite end, the funds allocated for the national health insurance from excise revenue has increased, from Rp 11.2 trillion in 2014 to Rp 15.14 trillion in 2015, and an expected Rp 17 trillion for this year.
"Besides funding health programs, funds will be also allocated to preparing people currently working in tobacco-related industries to shift to other sectors," Sri Mulyani said. (ags)
