Indonesia: discreet increase in tobacco taxes
December 15, 2020
Par: National Committee Against Smoking
Dernière mise à jour: December 15, 2020
Temps de lecture: 3 minutes
Indonesian Finance Minister Sri Mulyani announced a 12.5% increase in tobacco excise tax, which will take effect from February 2021.[1]Health groups say the increase is insufficient to reduce the country's smoking prevalence, which is one of the highest in the world.[2].
The price of cigarettes in Indonesia remains one of the lowest in the world, which contributes significantly to the high smoking rate in the country with 62.9% of males over 15 years old (4.8% of females) smoking.[3]Making cigarettes less affordable through increased tobacco taxation is an evidence-based policy set out in the World Health Organization Framework Convention on Tobacco Control (FCTC). Significant tax increases are even the most effective measure to reduce smoking. In Indonesia, the share of taxes represents a little less than 45% of the retail price of a pack of cigarettes. However, good practices in this area recommend that taxes (excise duties) on tobacco represent at least 70% of the price of detail.
Smoking prematurely kills approximately 225,700 Indonesians each year. Moreover, contrary to global trends, tobacco use remains high and is even increasing among young people: 35.61% of boys aged 13 to 15 (3.51% of girls) use tobacco.[4].
Indonesia, a paradise for the tobacco industry
Indonesia has not ratified the WHO FCTC. Lacking strong political will and commitment to tobacco control, the country struggles to implement effective tobacco control measures, including tax increases. The current relationship between the government and the tobacco industry leads the latter to play a significant role in public policy. According to the 2020 tobacco industry interference index[5], Indonesia ranks 56e out of 57 because of these close ties between the government and the industry. Moreover, when public authorities try to engage in measures, particularly fiscal ones, the tobacco industry does not hesitate to use the media to exert pressure in favor of its interests. Finally, the latter has used the Covid-19 pandemic period to deploy image strategies and launch new products.
Keywords: Indonesia, taxes, tobacco ©Generation Without Tobacco[1] Adelia Pratiwi and Febri Pangestu, Cigarette excise tax, employment and industry income, Jakarta Post, December 14, accessed the same day [2] Iqbal Musyaffa, Experts laud tobacco tax hike in Indonesia, Anadolu Agency, December 12, 2020, accessed December 14, 2020 [3] Riset Kesehatan Dasar (Riskesdas) 2018, Ministry of Health of Indonesia. [4] Indonesia Global Youth Tobacco Survey (GYTS) 2019. Centers for Disease Control and Prevention. [5] New Global Index Shows Aggressive Tobacco Industry Lobbying in 2019 and Exploitation of COVID-19 Pandemic in 2020, STOP, November 16, 2020, accessed December 14, 2020 National Committee Against Smoking |
