… but its latest increase in excise duties on cigarettes will do almost nothing to deter people from lighting up.
According to Reuters, the government has raised excise tax for tobacco products by an average 6.2 percent for next year. Even so, cigarettes will still cost about one dollar per packet, among the cheapest in the world.
The government’s excise move is described as “part of its efforts to boost tax revenues and limit tobacco consumption in Southeast Asia’s largest economy”.
But the size of the increase appears carefully calibrated to add millions of dollars to the notoriously corrupt country’s coffers while keeping the price of cigarettes down.
Unless I’m mistaken, Reuters got its currency conversions wrong when it said the tax “will range from between 65 rupiah ($0.729) and 325 rupiah per stick of cigarette depending on type”.
Sixty five rupiah is actually $0.007, or 0.7 cents. Even if you only earn a couple of dollars a day – as millions of Indonesian smokers do – that sort of price rise isn’t going to stop you from feeding your addiction.
Feeding your children will just get that little bit harder.
This tax play perfectly illustrates the Indonesian government’s cynical and morally repugnant attitude to smoking. It is a cash grab that ensures demand for cigarettes will remain undiminished in a country that has made itself a playground for the tobacco industry.
Reuters reports that the government “aims to collect 62.8 trillion rupiah [seven billion dollars] in excise tax next year, a six percent increase from 59.3 trillion rupiah set for this year”.
The money is clearly more important to the government than the health of Indonesians.