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Finance Ministry Plans to Increase Tobacco Tax Yet Again
A farmer harvesting tobacco plants in Tanjungwangi Hamlet, Bandung, West Java. TEMPO/Prima Mulia
Thursday, 26 January, 2017 | 14:00 WIB
Finance Ministry Plans to Increase Tobacco Tax Yet Again

TEMPO.CO, Jakarta - The Finance Ministry is planning to push cigarette consumption down by increasing tobacco tax. Since January 1, the government has been imposing average tobacco tax of 10.54 percent. The government has also raised retail prices of tobacco products through the Regulation of the Minister of Finance No. 147/PMK.010/2016 on the Third Amendment to the Regulation of the Minister of Finance No. 179/PMK.001/3012 on Tobacco Product Tax Rate.

“There is a chance that we will increase [tobacco] tax yet again,” the Finance Ministry’s director for fiscal policy Suahasil Nazara told Tempo Wednesday, January 25, 2017.

The National Social Security Council (Dewan Jaminan Sosial Nasional) consultant Hasbullah Thabrany said that he was not surprised by the efforts made to push tobacco consumption down. He reasoned that tobacco consumption could harm future state budget allocation.

“The tangible threat is increased healthcare costs, the intangible one is low life expectancy,” he said.

According to Hasbullah, tobacco-related diseases highly burden Indonesia’s universal healthcare program (JKN). He said that four catastrophic illnesses eat up 25 percent of total JKN costs, noting that there are still 1,200 more diseases to be covered.

Mohamad Subuh, the Health Ministry’s director for disease prevention and control, said that economic benefits of tobacco taxation are meaningless in the long run. He illustrated that the annual tax revenue from tobacco products can reach Rp115 trillion, “But can the sick and the dead be replaced with the money?”





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