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Beer pricier next year as tax raised
Beer drinkers will have to spend more to enjoy their favorite beverage next year as the government has issued a new excise rate for that particular alcoholic drink, while the levy for other categories of liquor remains unchanged
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span>Beer drinkers will have to spend more to enjoy their favorite beverage next year as the government has issued a new excise rate for that particular alcoholic drink, while the levy for other categories of liquor remains unchanged.
The Finance Ministry recently issued Finance Ministerial Regulation (PMK) No. 158/2018 on the excise rate for ethyl alcohol as well as beverages and concentrates that contain ethyl alcohol that will come into effect on Jan. 1.
The new policy will increase the excise rate for class A beverages, or those that contain up to 5 percent of ethyl alcohol, including beer. The rate was raised by 15.3 percent to Rp 15,000 (US$1.03) per liter for both local and foreign-made drinks, from Rp 13,000 per liter stipulated in a 2013 regulation.
On the other hand, the government has maintained excise rates for class B beverages, or those that have an ethyl alcohol content of between 5 and 20 percent, such as wine. There is also no change for class C beverages, or those that have a 20 percent ethyl alcohol content, like whiskey and vodka.
Nirwala Dwi Heryanto, the director for excise technicalities and facility at the Customs and Excise Directorate General, said on Monday that the decision to raise the excise for class A beverages was to adjust it with the annual inflation rate, pointing out that there had been no adjustment over the past few years.
“[The class A excise hike] is only to adjust to the inflation rate. Meanwhile, beer producers have increased their retail prices every year,” said Nirwala in Jakarta. “If the [excise] rate was maintained then the excise payment ratio to [producers’] revenues continue to dip, that is why we raised it.”
As for the unchanged rate of class B and C beverages, he added that the government had increased import duties for the categories five times between 2016 and this year.
The government’s decision was criticized by Bambang Britono, the executive committee member of the Indonesian Malt Beverage Producers Association (GIMMI), who said it was untimely as the domestic industry had been struggling to recover from Trade Minister’s Regulation No. 6/2015 that bans the sale of the class A beverages in minimarkets in almost all parts of the country, except several tourist destinations.
“The addition of the excise hike would create a double shock to the local beer industry, which of course will also have an impact on the demand [for beer],” added Bambang.
According to data from GIMMI, the contribution of class A beverages, including local and imported ones, to alcoholic drinks’ excise revenue had been steadily decreasing.
Class A beverages contributed some 65 percent to the realized excise revenue from alcoholic drinks in 2014, or equal to Rp 3.41 trillion. Last year, the contribution only reached 58 percent, or equal to Rp 2.86 trillion, the data show.
Over the same period, the contribution of class B beverages to the total realized alcoholic drinks’ excise revenue fell from 28 percent in 2014 to 34 percent last year. Meanwhile, the contribution of class C beverages also increased from 7 percent in 2014 to 12 percent last year.
The government has collected excise revenue worth Rp 5.86 trillion from alcoholic beverages from January to Dec. 14, or 90.21 percent of its Rp 6.5 trillion target as outlined in the 2018 state budget.
As distribution of goods remained the main problem for the industry, Bambang suggested that the government should regulate official beer retailers so as to ease the supply of beer on the market, while also maintaining control over the commodity.
The Finance Ministry’s customs and excise director general, Heru Pambudi, said on Monday that it would continue joint efforts with the National Police and Indonesian Military (TNI) to curb illegal imports of alcohol into the country, which would also help local producers to fill the market demand.
He claimed that such a strategy had benefitted local alcoholic beverage producers, particularly those in the class B and C categories, by strengthening their foothold in the domestic market.
