JAKARTA. The increase in cigarette excise rate will lead to 0.23% of inflation rate in the next year. Aside of the inflation, government claimed to have estimated the social impact of the excise rise, as well as its impact to cigarette industry.
According to Minister of Finance Sri Mulyani, the objective for imposing excise is to control consumption. However, in the other side, government wants to prevent social turbulence and jump in inflation as the results of the increase in cigarette.
Sri Mulyani added that, the government has included the inflation to 4% of 2017 assumption inflation. “We also have estimated the impact (of the excise rise) to people’s purchasing power”, said Sri Mulyani.
Sri Mulyani said that government has not determined the impact of cigarette excise rise to poverty rate. It is known that cigarette consumption contributes to poverty rate, because a lot of people are cigarette consumers.
Minister of Finance Regulation No147/PMK.010/2016 stipulates a maximum of 13.46% of excise rise for white clove cigarette machines and a minimum of 0% of excise rise for hand rolled cigarette.
Under the new tariff, retail price will increase in average by 12.26%, in accordance with the state revenue’s target. To date, excise revenue is a major contributor to State Budget. In 2014, excise revenues contributed to 12.29%, 11.68%, and 11.72% of State Budget in 2014, 2015, and 2016, respectively. In 2017, government sets 10.01% of tax revenue from IDR149.8 trillion of cigarette excise.
Directorate General of Customs and Excise claimed to have commitment in securing excise revenues by conducting tight supervision. As of 29 September 2016, Directorate General of Customs and Excise has taken action over 1,593 cases of illegal tobacco, increased by 1.29 times from 1,232 cases in 2015.
Director of Institute Development of Economic and Finance (INDEF) Enny Srihartati said that the rate of cigarette excise rise is still realistic. However, she is unsure that the policy will be effective in reducing cigarette consumption.
(Muhammad Farid/Translator)
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