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Indonesia bets on plastic, sugary drinks to reduce dependence on tobacco excise
The Finance Ministry estimates that excise on plastic products and sweetened beverages may yield Rp 13.52 trillion a year in additional state revenue.
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Island of plastic: Goats rummage through plastic waste on Panggang Island off Jakarta’s coast. The government plans to impose a plastic bag excise to tackle plastic pollution and generate state revenue. (JP/Wendra Ajistyatama)
L
evies on plastic products and sweetened beverages, the government hopes, will reduce dependence on the tobacco excise for state revenue as the country looks to restore its finances after the pandemic.
The annual income from the tax on plastic products is estimated at Rp 7.27 trillion (US$509.07 million) and that from sweetened beverages at Rp 6.25 trillion, according to Nirwala Dwi Heryanto, the director of excise and technicalities at the Finance Ministry’s Customs and Excise Directorate General.
The largest contributor to the plastic product excise is plastic packaging, which has seen a surge in demand from booming food deliveries during the pandemic. The government was also considering an excise on sanitary napkins, said Nirwala.
He added that putting plastic products and sweetened beverages on the list of taxable goods was necessary not just to diversify state revenue sources but also to address the plastic waste problem and public health issues like diabetes and obesity.
“Right now, [revenue] depends on the tobacco industry,” Nirwala said in an online discussion on Thursday. “Around 96 percent of the excise income is from tobacco [products].”
The government has collected Rp 1.03 quadrillion in revenue in the first seven months of this year. While that is almost 12 percent more than a year earlier, it is still below the prepandemic level. With spending rising at the same time, the budget deficit is estimated at around 5.7 percent of GDP this year.
Read also: Govt expects less new debt this year with higher tax collection
