Ombudsman Raises Concern Over Plan to Increase Tobacco Excise
22 August 2016 14:06 WIB
TEMPO.CO, Jakarta - The Indonesia Ombudsman delivered several notions related to the planned tobacco excise increase. The increase is predicted to boost cigarette prices to Rp 50,000. Some of the notions include the Ombudsman’s concern that higher excise rate would not be effective to suppress cigarette consumption.
Although the total amount of tobacco excise in 2015 had reached Rp 139.5 trillion, the Ombudsman was not certain that it goes in line with cigarette consumption rate. "If demands are elastic, it is predicted that excise will reduce revenue, but at the same time suppress cigarette consumption rate," according to Ombudsman Commissioner Alamsyah Saragih in a press release on Sunday, August 21, 2016.
However, if tobacco excise is to be increased and state revenue increases, Alamsyah said that it means cigarette consumption is not declining. "And household financial pressure will increase," Alamsyah said.
The Ombudsman also questioned the production sharing fund for tobacco producer region, which is considered to be ineffective. According to Alamsyah, the Tobacco Farmers Association argued that there are regions who still use the fund to purchase operational vehicles.
In addition to the lack of direct benefits, the Ombudsman argued that the percentage of production sharing for tobacco producer region, which is currently set at two percent, is too small. Alamsyah added that the government had only planned to issue a supervision guideline for tobacco production sharing fund in 2016. "As a result to bad management, local tobacco prices are sold cheaper compared to imported tobacco," Alamsyah said.
The Ombudsman also highlighted the government’s strategy in spending revenues gained from tobacco excise. Alamsyah said that if the government is planning to shift from producing tobacco to other commodities, trillions of funds originated from tobacco excise should be used for research and development activities to discover new high productivity commodity.
JONIANSYAH HARDJONO
