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Govt carries on with tobacco excise hike despite bleak economic outlook
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Workers make hand-rolled cigarettes on Sept. 2 at an unidentified factory in Kudus, Central Java. The factory workers are among the recipients of the government’s direct cash assistance, which provides Rp 300,000 (US$19.22) per month per household. (Antara/Yusuf Nugroho)
T
he government plans to raise the cigarette excise by an average 10 percent annually over the next few years, continuing its longstanding effort to bring down tobacco use despite the recent acceleration of inflation.
Finance Minister Sri Mulyani Indrawati said on Thursday that the decision had been approved by President Joko “Jokowi” Widodo at a meeting held shortly before she made the announcement.
The excise is imposed in the form of a fixed rupiah sum charged per quantity sold.
The excise on machine-made clove cigarettes (SKM) and white cigarettes (SPM) will rise by between 11 percent and 12 percent, and the excise for hand-rolled cigarettes (SKT) will rise by 5 percent in both 2023 and 2024.
Electronic cigarettes are subject to the greatest hike, which will differ by type of product but will average 15 percent, while the excise on other tobacco products will rise by 6 percent. All the hikes will occur annually over the course of next five years.
“The excise hikes will increase the prices of tobacco products, making them far less affordable, and we hope their consumption will go down as well,” Sri Mulyani said during a live broadcast from Bogor Palace.
The average hike for next year is slightly lower than this year’s average of 12 percent, which had been decided last year.
