Cigarette excise in Indonesia

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Cigarette Excise in Indonesia

Cigarette excise in Indonesia refers to the taxation imposed on the production and sale of cigarettes within the country. This excise tax is a significant source of revenue for the Government of Indonesia and plays a crucial role in the country's public health policy and economic policy.

History

The imposition of cigarette excise in Indonesia dates back to the colonial era, with the Dutch East Indies government introducing the first tobacco taxes. After gaining independence, the Indonesian government continued to levy taxes on cigarettes, gradually increasing the rates to curb smoking and generate revenue.

Structure of Excise

The cigarette excise in Indonesia is structured based on the type of cigarette, production scale, and retail price. There are three main categories:

• Machine-made kretek (clove cigarettes)
• Hand-rolled kretek
• White cigarettes (non-clove)

Each category is subject to different excise rates, with machine-made kretek generally facing higher taxes compared to hand-rolled kretek and white cigarettes.

Economic Impact

Cigarette excise is a major contributor to the national budget. In 2020, it accounted for approximately 10% of the total state revenue. The tobacco industry is also a significant employer in Indonesia, with millions of people involved in tobacco farming, production, and distribution.

Public Health Impact

The high prevalence of smoking in Indonesia has led to significant public health challenges. The government has used excise taxes as a tool to reduce smoking rates, particularly among youth and low-income populations. Despite these efforts, Indonesia still has one of the highest smoking rates in the world.

Recent Developments

In recent years, the Indonesian government has implemented several reforms to the cigarette excise system. These include annual increases in excise rates, stricter regulations on advertising and packaging, and efforts to combat illegal cigarette production and distribution.

Challenges

The implementation of cigarette excise in Indonesia faces several challenges, including:

• Illicit trade in cigarettes
• Resistance from the tobacco industry
• Balancing revenue generation with public health goals

See Also

• Tobacco control in Indonesia
• Public health in Indonesia
• Economy of Indonesia
• Smoking in Indonesia