TEMPO.CO, Jakarta - The National Committee for Tobacco Control on Monday proposes a government increase in tobacco excise tax with the aim of greatly reducing cigarette consumption. The committee’s member Hasbullah, in a press conference, stated that an increase in tax will also help the welfare of tobacco farmers by optimizing Tobacco Excise Revenue Sharing Fund (DBHCHT).

He added that cigarette excise in Indonesia has always increased since 2009 and only in 2014 and 2019 did not see any increases. Even so, the trend of cigarette consumption remains high.

The government's decision to raise the average cigarette excise tax by 10 percent and 15 percent for e-cigarette excise is a good start in making long-term policies.

"The increase in conventional cigarette excise, which is set for two years directly, can be increased as a more sustainable policy, at least for the next 5 years," Hasbullah said at a press conference held by TCSC IAKMI, Monday, November 7.

Hasbullah explained that tobacco excise must be calculated in proportion to annual inflation and that it must be set far above it to help reduce smoking prevalence and suppress the commodity’s affordability.

A study by the Center for Indonesia's Strategic Development Initiatives (CISDI) 2021, shows that an increase in excise tax will have an impact on reducing consumption while balancing state revenues.

In its simulation, the balance between decreasing consumption and state revenues are still economically feasible if tobacco excise is bumped up to 46 percent.

"So, cigarette excise duty in 2023 should increase by 20-25 percent to control consumption as well as state revenue," he said.

NABILA NURSHARIFA | INTERN

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