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Cigarette prices to jump 35 percent as government hikes excise
The move marked the government’s reversal of its decision to leave the cigarette excise unchanged in 2019 — the first time since Jokowi assumed office in 2014.
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A tobacco seller in Parakan smokes a kretek cigarette in his warehouse. (JP/Dottie Bond)
T
he government has decided to increase the tobacco excise next year in a move aimed at, among other targets, reducing the smoking prevalence in the country.
“We decided to increase the cigarette excise by 23 percent on average, while the retail price will be hiked by 35 percent. This will be regulated in a Finance Ministry regulation,” said Finance Minister Sri Mulyani Indrawati at the State Palace on Friday.
She added that President Joko “Jokowi’ Widodo and Vice President Jusuf Kalla had given their blessings to the decision, which was also taken in consultation with the Office of the Coordinating Economic Minister, the Manpower Ministry, the Industry Ministry and the Agriculture Ministry.
The move marked the government’s reversal of its decision to leave the cigarette excise unchanged in 2019 — the first time since Jokowi assumed office in 2014. The cigarette excise was increased by 10.04 percent in 2018, 10.5 percent in 2017, 11.3 percent in 2016 and 8.7 percent in 2015, according to Statistics Indonesia (BPS).
Sri Mulyani said the government’s excise policy was taken in accordance with a variety of factors, namely the efforts to reduce the smoking prevalence, to allow revenue management for the tobacco industry as well as to raise state revenue.
“From the consumption side, the rising prevalence of smoking, particularly among women and children, has come to our attention,” said the former World Bank managing director. “We have to pay attention to how to use excise policy to reduce the rising trend in cigarette consumption.”
The 2018 Basic Health Survey (Riskesdas) conducted by the Health Ministry revealed that smoking prevalence among children aged between 10 and 18 years increased to 9.1 percent last year, compared to 7.1 percent recorded in previous research in 2013.
