Finance Minister Sri Mulyani Indrawati has said that she will increase cigarette excise tax by 12.5 percent next year.
“This excise policy is the amount of excise tax on tobacco products that has changed and we need to increase it in 2021 in an atmosphere where COVID-19 is still happening,” said Sri Mulyani.
The increase in excise imposed on companies that issue or produce class 1, machine-made, white cigarettes will be 18.4 percent. Type 2a machine-made white cigarette excise will increase by 16.5 percent, whilst type 2b machine-made white cigarettes excise will increase by 18.1 percent.
According to Tempo, class 1 machine-made kretek cigarettes will increase by 16.9 percent, class 2a machine-made clove cigarettes excise will be increased by 13.8 percent, and class 2b machine-made kretek cigarettes will increase by 15.4 percent. For hand-rolled kretek cigarettes, the excise tariff isn’t changing.
“Hand kretek cigarettes have the largest labour element,” said Sri Mulyani. With all rates taken into account, next year’s increase in excise rates will be an average of 12.5 percent.
Sri Mulyani explained that the excise policy takes into account aspects of health and general economic conditions that are affected by COVID-19, especially among groups of workers and farmers. The government continues to strive to control the consumption of tobacco products.
“Here, the focus is on the problem of the health impacts of tobacco or cigarette products. At the same time, the government also needs to continue to look after workers who work in cigarette factories, farmers who produce tobacco, and of course, from the side of the industry itself,” said Sri Mulyani.