TEMPO.CO, Jakarta - The government has decided to increase the excise tax on tobacco and tobacco products (HJE) or the cigarette tax by 23 percent next year. Finance Minister Sri Mulyani said the tax hike would take effect starting January 1.
“We finally decided to raise the tax by 23 percent,” said Sri at the Presidential Palace Complex, Jakarta, Friday, September 13.
In addition to the tax hike, the retail selling price (HJE) of tobacco is also set to soar by 35 percent. “The selling rate will be stipulated in a Finance Minister's Regulation under the decree of the President on January 1, 2020,” she added.
The former managing director of the World Bank reiterated that the tax hike was aimed at reducing cigarette consumption, controlling the industry, and maintaining state revenue, which she estimated to reach Rp173 trillion next year.
She further said that the government was concerned about the increasing prevalence rate of smokers among women and children from 2.5 percent and 7 percent to 4.8 percent and 9 percent, respectively.
“Therefore, we have to think of how to use this tax to reduce the smoking trend,” Sri Mulyani remarked.
The previous hike of cigarette tax was implemented in 2018 by 8.9 percent.