The cigarette price hike and the decline in cigarette production will increase the likelihood of the state revenue rising on account of the tobacco exciseJakarta (ANTARA) - The government's decision to increase tobacco excise by 12 percent in 2022 will likely boost the state revenue, Tauhid Ahmad, Institute for Development of Economics and Finance (Indef) executive director, stated.
"The cigarette price hike and the decline in cigarette production will increase the likelihood of the state revenue rising on account of the tobacco excise," Ahmad told ANTARA in Jakarta.
The government has targeted Rp192 trillion of revenue from tobacco excise in 2022, increasing by 11.56 percent, from the 2021 target of Rp173 trillion, he pointed out.
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Despite the excise hike, Ahmad expects the revenue from tobacco excise in 2022 to be lower than 2021 when the excise revenue had surpassed its target and reached Rp193 trillion, the executive director noted.
The tobacco excise hike, apart from increasing the state revenue, also aims to control cigarette consumption that has proven to be detrimental to health, he remarked.
"With a decline in consumption rate, the production rate will decline as well. I believe this will be consistent with the government's mission to reduce the prevalence of smoking among children and teenagers, particularly those under 18 years of age," Ahmad stated.
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The decline in cigarette production will be causal to a reduction in the cigarette industry's contribution to the national economy, he remarked while adding that he had yet to assess the exact percentage of the potential decline.
Earlier, Finance Minister Sri Mulyani Indrawati spoke of her intent to be fair in deciding the tobacco excise hike.
"I need to play it gracefully. Hence, I prepare several plans on the increase in excise and its effect. (By increasing the tobacco excise), we will also help tackle (the threat of) illegal cigarettes," Indrawati stated during a talk show hosted by celebrity Deddy Corbuzier.
The minister admitted to the fact that any change to the tobacco excise would be highly delicate, as multiple stakeholders with differing interests stood to be affected.
"If the excise hike is too low, the Health Ministry will rebuke me, but if I increase the excise too high, the public will accuse me of being influenced by the Health Ministry and international community," the minister remarked.
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Translator: Sanya Dinda S, Nabil Ihsan
Editor: Fardah Assegaf
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