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Jakarta Post

Expert calls for tripling of tobacco tax

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Fri, March 11, 2016   /  08:59 am

University of Indonesia (UI) public health expert Hasbullah Thabrany threw down the gauntlet to the government on Thursday, demanding that it amend existing tobacco excise provisions in a bid to downscale the prevalence of smoking in the country as well as increase the revenues raised from the industry.

Tobacco excise is regulated under the 2007 Excise Tax Law, which is an amendment of the original 1995 version. The current provision allows excises on tobacco products to be as high as 275 percent of their factory prices or 57 percent of their retail prices. Hasbullah criticized the regulation for '€œnot doing enough to dissuade Indonesian people from consuming cigarettes on a daily basis'€.

'€œThe government must boost the minimum excise on tobacco products to 200 percent of their retail prices,'€ Hasbullah said, adding that he had based his demand on the Nawacita '€” a Sanskrit term for '€œnine programs'€ '€” authored by President Joko '€œJokowi'€ Widodo and Vice President Jusuf Kalla.

The World Health Organization (WHO) recommends a minimum excise on tobacco products of 70 percent of their retail prices, the head of the UI center for health economics and policy studies (CHEPS) noted.

'€œHigher excise taxes would place a higher price on a pack of cigarettes than they have now. It would prevent people from consuming cigarettes due to their stifling price,'€ Hasbullah explained.

Indonesia is home to 72 million smokers aged over 15, according to WHO. Furthermore, the number of smoking-related deaths is skyrocketing. '€œIn the eighties, smoking accounted for 10 percent of deaths caused by cardiovascular disease and lung cancer. That number multiplied to 65 percent in 2013,'€ Hasbullah said.

On the other hand, he said, the boost in tobacco excise would be unlikely to curb the habits of heavy smokers, since '€œheavy smokers will always light a cigarette, even if the price is stifling'€.

According to the 2015 national social economy survey (Susenas) conducted by the Central Statistic Agency (BPS), kretek (clove) cigarettes were the second-highest selling item to the poor after rice. Kretek cigarette consumption among the poor stood at 8.1 percent in urban areas and 7.68 percent in rural areas.

CHEPS proposed that the government earmark money raised from an increased excise to be put toward several programs, including empowerment training for tobacco farmers, the national health insurance program, sport and art activities and medical research.

Meanwhile, the Finance Ministry'€™s customs and excise policy head Nasruddin Djoko Surjono said the government had already been directing revenue from tobacco excise to the revenue sharing fund (DBH) since 2007.

'€œThe central government gets 98 percent of the revenue, while the 2 percent is given to provincial administrations, especially those that have tobacco farming in their area,'€ Nasruddin said on Thursday.

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