Gov’t to Hike Tobacco Excise on 1 February 2021

Minister of Finance Sri Mulyani Indrawati (Photo: Documentation of Cabinet Secretariat PR)

Tariff adjustment for Tobacco Products Excise (CHT) will effectively take effect on 1 February 2021, Minister of Finance Sri Mulyani Indrawati said at the Cigarette Excise Policy Press Conference, Thursday (10/12).

The increase in cigarette excise includes the industry of Machine White Cigarette (SPM) class I (18.4%), SPM class 2A (16.5%), SPM class 2B (18.1%), Machine-rolled Kretek Cigarette (SKM) class 1 (16.9%), SKM class 2A (13.8%), SKM class 2B (15.4%), while for the Hand-made Kretek Cigarette industry, the increase is 0%.

This increase showed the Government’s commitment to balance and control the consumption of tobacco products. “The increase in CHT is expected to control cigarette consumption, reduce smoking prevalence, especially among children and women,” the Minister said.

The Government targeted Rp 173.78 trillion revenue contribution through excise tax in the 2021 State Budget. Therefore, the Government will adjust the Revenue Sharing Funds of Tobacco Production (DBH CHT) policy in 2021.

This adjustment is to dampen and provide support to those affected by the increase in CHT. The DBH CHT policy will balance three aspects, namely community welfare, health, and law enforcement.

“We provide a portion of 50% of the DBH CHT for the purpose of improving the social welfare of farmers and laborers, 25% of the DBH CHT in 2021 is still for the health aspect, while the remaining 25% is for law enforcement,” she said.

On community welfare, supports are given through programs to improve the quality of raw materials and environmental development. These programs include improving the quality of raw materials for farmers, diversifying crops including conducting training in order to improve the quality of tobacco, encouraging partnership programs between tobacco farmers and their partner companies, direct cash assistance (BLT) for tobacco farmworkers and cigarette workers,  professional training, and business capital assistance.

Apart from the public welfare aspect, the Government also prioritized the health aspect. This aspect includes national health insurance contribution assistance for underprivileged families, improving public health through various promotional, preventive, rehabilitative and curative activities.

“DBH CHT in the health sector is also aimed to reduce the prevalence of stunting, efforts to deal with the COVID-19 pandemic, to procure and maintain health infrastructure and other health services,” she said.

DBH CHT in the aspect of law enforcement is used to prevent and crack down on the production of illegal cigarettes, including building centers for the tobacco products industry. With the existence of this area, it is expected that small businesses can be protected and supervision of the production of illegal cigarettes can be carried out effectively. (PR of Ministry of Finance/UN) (FI/LW)