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View all search resultsIllegal tobacco excise plan casts haze over market fairness, policy certainty
Finance Minister Purbaya Yudhi Sadewa estimated that formalizing illegal cigarette production could generate additional trillions of rupiah (more than US$59 million) for the state coffers.
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A cigarette vendor waits for customers on Oct. 10, 2024, at her stall along a road in Surabaya, East Java. (AFP/Juni Kriswanto)
T
he government has unveiled a plan to introduce a special excise tariff for illegal cigarettes, which it hopes will curb the spread of illicit products while boosting state revenue that has been under pressure. However, industry players warn that if poorly designed, the scheme could undermine market fairness and fuel policy uncertainty.
The plan was revealed by Finance Minister Purbaya Yudhi Sadewa, who said that the details had yet to be finalized.
“It will give room for illegal cigarettes to enter [the legal system]. Once that excise exists and they still operate illegally, we will shut them down,” he said on Monday.
“[The new excise is intended for] local cigarettes, purely local ones, such as those in Madura, Sumenep and other areas. But illegal products from outside [the country] will be shut down without mercy.”
Purbaya previously said the new excise could be issued as early as this week, although internal discussions on its potential impact on state coffers are still ongoing and will later be brought to the House of Representatives (DPR), a process he acknowledged could take time.
He estimated that formalizing illegal cigarette production could generate additional trillions of rupiah (more than US$59 million) for the state coffers.
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