Complex cigarette excise tariff structure, main cause of high cigarette consumption

“Aside from cigarette excise tariff increase, it should also be accompanied with the increase of RSP and cigarette excise tariff structure simplification,” said Aryana.

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He said the National Development Planning Agency (Bappenas) 2021’s scenario shows that if the cigarette excise tariff increase is accompanied by cigarette excise tariff structure simplification to 3-5 tiers, it will increase state revenue, as well as achieving the youth smoking prevalence target at 8.7% by 2024.

“The imposition of cigarette excise tariff in Indonesia is still varied because of the high number of excise tariff groups. This makes cigarette prices to be varied and allows the people to purchase cheaper cigarettes, and therefore tobacco products excise tariff structure simplification is required,” he stressed.

Aryana said that simplifying the excise tariff structure will be important to reduce cigarette consumption because it will affect the pricing variance of cigarettes in the market. “Diminishing the cigarette pricing variance in the society will make cigarettes unaffordable for children, teenagers, and the impoverished. This will have an impact on consumption control,” he said.

Separately, Economist Faisal Basri said that the government should have carried out a breakthrough to make cigarettes unaffordable. “To reduce cigarettes affordability, excise tariff policies should be accompanied with the tobacco excise tariff structure simplification,” Faisal said during an online event “2021 World No Tobacco Day, titled “Complex Cigarette Excise Tariff Structure versus Healthier Indonesia by Visi Integritas in Jakarta, Monday (31/5/2021).

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Faisal Basri agreed with the Bappenas planning that the tobacco products excise tariff simplification should be carried out to reduce the tiers to 3-5 tiers. Previously, the government once planned tobacco excise tariff structure simplification to be carried out gradually in 2017 from 12 layers to become 5 layers, but the policy was canceled midway.

This, according to Faisal, was due to lobbying by cigarette manufacturers. “In Indonesia, there are many cigarette manufacturers that limit [their production volume] below their supposed limit in order to pay a cheaper excise tariff, and this is especially true for foreign manufacturers. They are even multinational companies,” said Faisal. "Cigarettes are cigarettes. In any kind of form, its [circulation] must be controlled,” he said.