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Govt Increases Tobacco Tax to Reduce Cigarette Consumption

Translator

Ricky Mohammad Nugraha

Editor

Mahinda Arkyasa

3 November 2022 23:41 WIB

TEMPO.CO, Jakarta - President Joko "Jokowi" Widodo approved a policy that increases tobacco excise by 10 percent for 2023 and 2024. One of the main reasons for the increase is to reduce the number of active smokers in children.

"In today's decision, the President has agreed to increase cigarette excise tax by 10 percent for 2023-2024 period," said Finance Minister Sri Mulyani after meeting at the Bogor Presidential Palace, West Java, on Thursday, November 3, 2022.

Sri Mulyani explained that the increase in excise will result in increasing prices for cigarettes classified under SKM, which refers to machine-made kretek cigarettes, machined white cigarettes (SPM), and sigaret kretek pangan (SKP).

The tobacco tax increase was conducted in consideration of a number of aspects ranging from agricultural labor to the cigarette industry, says Sri Mulyani. However, the main driver of the increase is the government’s goal to reduce smoking prevalence for the 10 to 18 years-old age demographic down to 8.7 percent. 

Another reason the government introduced this increased tax is the serious concern over cigarettes being the second largest household expense just below rice. Cigarette consumption has even exceeded household consumption of protein. 

Cigarette consumption is the second largest consumption in poor households, reaching 12.21 percent for the urban poor and 11.63 percent for rural communities.

M JULNIS FIRMANSYAH

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