TAX - JAKARTA. The World Health Organization (WHO) stated that the number of active smokers in Indonesia could reach 96.5 million by 2025. This could happen if domestic tobacco control remains weak. The cheap prices and easy access of cigarette products in Indonesia also make children and teenagers vulnerable to become active smokers.
Public Policy Researcher and anti-corruption activist Emerson Yuntho called for the Ministry of Finance to revoke the Indonesian Director General of Customs and Excise Regulation (DGCE Regulation) Number 37/2017 that allows cigarette manufacturers sell at a Consumer Price or the price for the end consumer below the 85% of the Banderole Price or the price printed on tax stamp, provided that the cigarette are sold in less than 50% regions of the Directorate General of Customs and Excise office.
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He believes that this policy could potentially reduce state revenue from the Corporate Income Tax sector. The potential of the tax losses is predicted to increase every year in accordance with the government decision to increase the cigarette excise tariff and minimum banderole price every year. Based on a basic simulation, the potential of state losses from the Corporate Income Tax from cigarette companies could reach Rp2.6 trillion annually.
“This is very ironic, because it happens at the time when the government is attempting to boost state revenue to cover many expenses,” said Emerson during Indonesia Budget Center virtual discussion, Jakarta, Thursday (18/6).
The calculation of potential state losses was obtained from an initial simulation to the research for Institute for Development of Economics and Finance (INDEF) research in 2019. The research sampled 1,327 cigarette brands sold with consumer price under the banderole price. As a result, the potential state losses from corporate income tax amounted to Rp1.73 trillion.
