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View all search resultsEmployers warn against hike in tobacco excise to meet state revenue goal
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A worker shows hand-rolled kretek (clove cigarettes) on Jan. 4, 2024, at a cigarette factory in Kudus, Central Java. (Antara/Yusuf Nugroho)
T
he Indonesian Employers Association (Apindo) has warned against a potential hike in the tobacco excise as the government looks to beef up state revenue next year without increasing taxes.
Apindo chairwoman Shinta Kamdani said in a press statement on Sunday that the government should on the contrary relieve pressure on tobacco producers after already subjecting the industry to a higher excise this year.
“If a higher excise […] is implemented without considering the real conditions of the labor-intensive [tobacco] industry, risks of weakening competitiveness and eroding job opportunities will only grow. As a matter of fact, this sector is the one that has been supporting state revenue and employed millions of workers,” said Shinta.
The statement continues to express Shinta’s hope that the government’s promise to refrain from introducing new taxes or higher tax rates next year would also apply to excise.
Despite sluggish revenue collection so far this year, next year’s state budget plan envisions a 10 percent increase from the expected Rp 2.86 quadrillion (US$174.9 billion) to be collected in 2025.
To achieve that, Finance Minister Sri Mulyani Indrawati, who is expected to be on her way out as finance minister in President Prabowo's first cabinet reshuffle, revealed in August that tax revenue would need to grow by 13.5 percent year-on-year, which she admitted was “rather high and ambitious”.
At the same time, she said there would be no regulatory changes to pursue the tax collection target, suggesting that an increase in tax rates was not on the cards. Instead, the government would seek to achieve the revenue growth through “internal reform,” such as by fixing flaws in the Coretax system.
