TEMPO.CO, Jakarta - Indonesia’s Finance Minister Sri Mulyani said the policy of increasing the excise tax on tobacco products has increased the cigarette price index. Sri argued that the policy is indeed designed to maintain the price per pack or even slightly increase it.

"But the number of smokers is still very high and tends to increase," said Sri in a working meeting with Commission XI of the House of Representatives (DPR) on Monday, December 12, 2022.

Such conditions represent the affordability of cigarette prices when there was no surge in the excise tax rate in 2019. In addition, Sri noted that cigarette production experienced a sharp decline when the government imposed a hike in excise tax rates. In 2020, the excise prices were high enough to cause a decline in production of up to 9.7 percent.

Meanwhile, when the excise rate was not increased in 2021, cigarette production increased by 4 percent. The government hoped that in 2022, cigarette production will decrease in line with the increase in excise rates. As of November 2022, cigarette production recorded a decrease of 3.3 percent compared to the previous year.

As previously reported, the government had set an increase in excise rates of 10 percent in 2023 and 2024 in an effort to reduce purchasing power, which is expected to reduce the cigarette consumption rate. This rate will differ according to the cigarette category, such as machine-made clove cigarettes (SKM), machined-made white cigarettes (SPM), and hand-rolled cigarettes (SKT).

RIANI SANUSI PUTRI

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