Tobacco Farmers Reject 23-percent Cigarette Tax Hike

TEMPO.CO, Jakarta - The Indonesian Tobacco Farmers Association (APTI) chairman Agus Parmuji opined the 23-percent cigarette tax hike is beyond a reasonable threshold and will highly affect farmers. Besides, at least 3 million of them depending lives on the tobacco industrial sector (IHT).

“Like it or not, tobacco farmers still rely on the purchase of national cigarette industry. At least 90 percent of them also rely on a conventional cigarette, especially machine-made kretek (clove cigarettes) or handmade kretek,” said Agus to Tempo, Sunday, September 15.

He reiterated that the tax would affect the business climate that potentially reduces the demand for tobacco raw materials from local farmers. Instead of eliminating the prevalence of young smokers, increasing the tax beyond the threshold will only switch smokers' habit from conventional to the electric cigarette.

“The tax for e-cigarette should be set higher because it besets farmers as it does not use local materials and the government on the revenue,” Agus underlined.

He added that the government should implement tax rate disparity to lower the prevalence of young smokers since most of them consuming machine-produced white cigarettes (SPM), that mostly contain imported materials. This means, higher excise rate is set for cigarettes with imported materials.

Meanwhile, the Indonesia Tobacco Society Association (AMTI) said that the tobacco tax hike would produce adverse impact which could increase the distribution of illegal cigarettes. As a result, the target revenue from tobacco excise at Rp171.9 trillion in 2020 will not be met.

LARISSA HUDA