Indonesia to Increase Tobacco Excise by 12.5 Percent Next Year

JAKARTA, KOMPAS.com – The Indonesian government has decided to raise the excise tax on tobacco products by 12.5 percent in 2021, said the finance minister on Thursday.

“We will increase the tobacco excise by 12.5 percent,” said Sri Mulyani Indrawati in a virtual press conference on December 10.

The media reported that the discussion about the excise tax on tobacco products was quite tough this year. The increase in tobacco excise will usually be announced at the end of October. But, this year it has been delayed to December.

The delay happened as this year’s discussion was held amid the Covid-19 pandemic, during which the government needs to balance the need for maintaining the health aspects and supporting the industry that employs many workers and farmers.

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“So in this case we try to balance the health aspect with the economic condition that is affected by the Covid-19, especially for workers and farmers,” said Sri Mulyani.

The minister said, however, the tax hike will not affect the hand-rolled clove cigarette producers because they are a labor-intensive industry that employs 158,552 workers.

SHUTTERSTOCK/Maren Winter An illustration of clove cigarettes.

“It means that the increase is 0 percent for the hand-rolled clove cigarette industry, which employs the highest number of workers,” she said.

The details of the increase in excise tax for each category of tobacco products are as follows:

White Cigarettes (SPM)

1. White cigarette category I: 18.4 percent
2. White cigarette category IIA: 16.5 percent
3. White cigarette category IIB: 18.1 percent

Machine-made Clove Cigarettes (SKM)

1. Machine-made clove cigarette category I: 16.9 percent
2. Machine-made clove cigarette category IIA: 13.8 percent
3. Machine-made clove cigarette category IIB: 15.4 percent

(Writer: Mutia Fauzia | Editor: Bambang P. Jatmiko)

Source: https://money.kompas.com/read/2020/12/10/120813926/sah-sri-mulyani-naikkan-cukai-rokok-125-persen-untuk-tahun-depan?page=1.