Tobacco Ecosystem Requests No Increase in Excise Tax Next Year

JAKARTA – The impending increase in cigarette tax which will coincide with the increase in excise duty next year will be a heavy blow to entrepreneurs, consumers and industry players, including workers and tobacco farmer . This condition raises concerns for the tobacco ecosystem due to the decision to impose tariffs excise and cigarette taxes Next year is considered to be very decisive in the fate of all parties who have a livelihood in this industry.

After increasing the average excise rate by 10% in 2024, the government passed the VAT Law regulations stdtd Law 7/2021 concerning Harmonization of Tax Regulations (HPP) which has the impact of the VAT rate on cigarettes increasing to 10.7%, from the previous 9, 9%. This is in line with the increase in the general VAT rate from 11% to 12% in 2025 in accordance with the Tax Harmonization regulations.

Responding to this condition, Universitas Pelita Harapan (UPH) tax observer Ronny Bako explained that if the Excise Tax on Tobacco Products (CHT) continues to be increased, it is certain that the excise revenue target will not be achieved again. Because this condition has not been proven to be effective in reducing smoking, but it opens up opportunities for people to switch to smoking cigarette prices more affordable ones, including buying illegal cigarettes.

“Last year it was clear that cigarette excise revenue was not achieved. “So the government should be consistent with this system so that cigarette excise does not need to be increased again,” said Ronny to the media.

Previously, the Directorate General of Customs and Excise (DJBC) explained that the downtrading phenomenon (switching to cigarette consumption at lower prices) usually occurs after the excise increase is implemented. These changes in consumption behavior ultimately influence CHT acceptance.

Thus, he appealed to the government to take a wiser stance by increasing supervision over cigarette consumption to reduce the prevalence rate, which is the government’s target, as well as enforcing the law against illegal cigarettes.

“The government’s function to disseminate information to the public about the impact of increasing cigarette excise is also very important. Don’t let the cigarette excise tax increase, people become noisy because of the impact on the price of cigarettes they will pay. “That’s why this literacy must also be accepted by society,” he appealed

Also voicing their concerns, groups of farmers and tobacco workers who are members of the Indonesian Tobacco Farmers Association (APTI) asked the Government to take fair decisions, especially regarding the planned 2025 excise tax increase.