The Increase in e-Cigarette Excise Rates is Valid for Multi years, Here's the Reason

Wednesday, 14 December 2022

The Increase in e-Cigarette Excise Rates is Valid for Multi years, Here's the Reason

JAKARTA. It is unusual for the government to raise the multi-year excise rate for e-cigarettes, for the next five years divided into two periods. So far, excise rates have increased almost every year.

In the first period, which applies to the 2023-2024 timeframe, the excise rate on e-cigarettes will be increased by an average of 10%. Meanwhile, in the next period for period between 2023 and 2027, the tariff increase is an average of 6%.

Quoting, there are several reasons for determining this long-term rate increase.

Provide Business Certainty

The first reason is to provide certainty to business actors or cigarette manufacturers in the country. Because, if the decision to increase is made every year, it will always provoke controversy.

In addition, the multiyear rate setting policy is also based on the aspirations of various parties. Meanwhile, in a policy context, setting multiyear tariffs can also be carried out simultaneously with the preparation of a roadmap or roadmap for the transformation of tobacco products.

Minimal Local Content

The second reason is that multi years tariffs are set because they consider the lack of local content of e-cigarette products.

Health Reason

The third reason is related to public health protection. Especially if the market for e-cigarettes penetrates downward, kids.

Moreover, based on government data, cigarettes account for 12.21% of consumption in poor urban households and 11.63% in poor rural households.

This level of consumption is the second largest after rice and is above the consumption of protein that people actually need, such as eggs, chicken, tofu, and tempe.

Trigger Wholesale Action on Excise Ribbon

Meanwhile, quoting Bisnis Indonesia on Tuesday (13/12), to get around the increase in excise rates which will take effect from 1 January 2023, cigarette manufacturers will maneuver by buying up excise stamps or forestalling, before the regulations take effect.

This action is taken so that they can maintain their margins when the excise tax actually increases. However, the government admits that they have anticipated the possibility that forestalling will boost orders for excise stamps from the government before 31 December 2022.


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