T

his year, the Indonesian government is going to increase tobacco excise by an average of 10.5 percent to curb the smoking habits of its people besides boosting state revenue.

However, with about a 5 percent increase in annual inflation, and an annual increase in wages, the 10 percent hike in tobacco excise is not high enough. The cigarette price in Indonesia ranges between Rp 13,000 (about US$1) and Rp 15,000 per box, the third lowest in Southeast Asia after Cambodia and Vietnam.

Meanwhile in Thailand, cigarettes are more expensive, reaching 100 baht per box, equal to Rp 38,000. With increasing income levels, and relatively stable cigarette prices, cigarettes in Indonesia have become more affordable over the past several years. Thus, increasing its tax by 10 percent won’t make much of a difference.

Tobacco excise is also called a sin tax since this taxation is only imposed on harmful products and its purpose is to limit consumption. Besides tobacco, the sin tax is also collected from alcoholic beverages.

A survey conducted by Professor Hasbullah Thabrany of the University of Indonesia found that smokers would quit if the price of tobacco products were raised three times from its current price. Based on a survey involving about 1,000 respondents, about 80 percent of passive smokers and 76 percent of active smokers agreed that the price of tobacco products should be raised. Furthermore, about 72 percent of respondents would stop smoking if the price was raised threefold.

Raising the price of tobacco products can be most easily achieved by raising tobacco excise.

Based on article 6 of the WHO Framework Convention on Tobacco Control (FCTC), every country should increase tobacco taxation on a regular basis with consideration of account inflation and income growth in order to reduce consumption of tobacco products. Thereby, if the product’s price is still relatively cheap even after being taxed, the tax should continually be increased.

The FCTC, a WHO-led initiative, was first adopted by the World Health Assembly on May 21, 2003, and entered into force on Feb. 27, 2005. It was developed in response to the globalization of the tobacco epidemic. However, among 183 countries which have ratified the FCTC, Indonesia is not one of them. Apparently, this status will stay the same for quite some time.

Earlier in June, President Joko “Jokowi” Widodo expressed that Indonesia should not ratify the FCTC only to follow other countries’ trends. Instead, Indonesia should have its own considerations as a tobacco producer country. The president fears that strengthening tobacco controls will threaten tobacco farmers’ welfare.

Although the argument that strengthening tobacco control can affect farmers’ welfare seems convincing, this claim is untrue. A study by the University of Michigan on the 20-year impact of tobacco control policies found that successful tobacco control would only reduce global demand for tobacco at a very slow rate.

Tobacco is an addictive product as it contains nicotine. Those who have been exposed to it for long term will display addictive symptoms upon withdrawal, such as headaches, nausea, and anxiety. These uncomfortable symptoms make it incredibly difficult for smokers to immediately stop consuming tobacco products.

Thus, increased prices of tobacco products will have no short-term effect to its production and therefore will not put farmers’ livelihoods in jeopardy.

Arguments against implementing tobacco control are often focused on the potential economic loss it may bring. This year the tobacco industry is expected to contribute Rp 148.86 trillion in excise to state revenue.

However, the revenue gained from tobacco products is not enough to finance tobacco related deaths and illnesses. Indonesia is home to 61.4 million smokers with an overall average number of cigarettes smoked per day at 12 cigarettes. The total loss due to tobacco consumption in 2013 hit Rp 378.75 trillion, resulting from lost productivity due to illness, disability and premature death in youths and medical expenses. With an increasing number of smokers and even younger age initiation, this figure is unlikely to decline.

Therefore, increasing tobacco excise regularly is a win-win solution for the government. If the tobacco excise is raised to a more effective percentage, the government could rake in tens of billions of rupiah in additional income annually, which could be used to cover health expenses from tobacco related illnesses and finance alternative planting programs for tobacco farmers.

Meanwhile, the unaffordable price of tobacco products will protect children and poor households from buying tobacco products.

The Central Statics Agency (BPS) found that the biggest expenditure in poor households was rice and cigarettes whereas spending for education and nutrition came later. Thereby making cigarettes so expensive they become unaffordable will gradually reduce tobacco consumption and in the long term may encourage people to stop using it altogether.

Efforts in strengthening tobacco control in Indonesia have been done in various ways, from bottom-up to top-down, through fiscal and non-fiscal policies, from grassroots activities to direct lobbying. However, all of that hard work has changed little.

Until now, advocacy efforts to champion tobacco control through legislation has been burdensome, it’s physically and emotionally draining as the government is still half-heartedly committed to tobacco control.
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The writer is a medical doctor who graduated from the University of Indonesia and was an LPDP scholarship recipient.