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Tobacco excise increase: Catching up with smokers
In March 2019, Statistics Indonesia (BPS) showed that households below the poverty line in cities spent 12.2 percent of their total expenditure on cigarettes, more than their spending on protein such as eggs and chicken, which was below 5 percent.
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A worker arranges sticks of the hand-rolled kretek brand, Dji Sam Soe, at the PT HM Sampoerna factory at Surabaya’s Rungkut Industrial Estate. (JP/Wahyoe Boediwardhana)
T
he government has decided to raise the excise tax rate and the minimum retail prices of cigarettes by 23 and 35 percent respectively starting in January 2020 in a bid to control tobacco consumption.
Smoking prevalence in Indonesia has been rising at an alarming rate. The Health Ministry has revealed that Indonesia has one of the highest rates of smokers in the world. The prevalence of smoking among adult males grew from 62.2 to 62.9 percent in the past 10 years. The number hit a peak in 2016 at 68.1 percent, the highest rate in the world. While smoking prevalence in the overall population only increased from 31.5 to 33.8 percent in the same period, the number for women smokers rose quite significantly from 1.3 to 4.8 percent. Child and teenaged smokers also increased 1.9 percent.
This trend has occurred even though cigarettes were less affordable from 2013 to 2018 in relative terms. As measured by the affordability index, the percentage of daily gross domestic product (GDP) per capita to buy a pack of cigarettes grew from 10.3 to 11.4 percent in the past five years.
The relatively inelastic consumption of cigarettes responding to the change in price can be connected to the fact that cigarettes have been the second-highest contributor to poor households. In March 2019, Statistics Indonesia (BPS) showed that households below the poverty line in cities spent 12.2 percent of their total expenditure on cigarettes, more than their spending on protein such as eggs and chicken, which was below 5 percent.
With this “sticky” consumption level, tobacco use needs to be controlled for its negative effect on health. Based on research conducted by the University of Indonesia’s Center for Social Security Policy in 2018, babies born in smoking families have a 5.5 percent higher risk of stunting and wasting in their golden growth period.
Institute for Health Metrics and Evaluation (IHME) research in 2017 found that the five leading causes of death in Indonesia were all tobacco-related, including ischemic heart disease, cerebrovascular disease, chronic respiratory disease, tuberculosis and diabetes.
In the end, smoking may impose an enormous economic burden and later put our social security system at risk and burden the national health insurance (JKN) program, Renny Nurhasana’s doctoral research in 2018 found that smoker families were less compliant in paying the health insurance premium.
