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Cigarette Price and Tobacco Tax Panic: The Rumors versus the Facts!

Cigarette Price and Tobacco Tax Panic: The Rumors versus the Facts!

For the past week, the internet has been flooded with a great deal of (sometimes rather confusing) information that the government is planning to increase the tobacco tax to a rate which brings the average price of a pack of cigarettes in this country to reach Rp.50.000,-.

Considering that the current average price per pack is between Rp.15.000,- to Rp.20.000,-, the rumors of the new policy that was said wwould be enforced starting from next month quickly became a hot topic, or to be exact, a rather scary idea which got lots of attention along with all sorts of reactions. Understandably, on this stage, the concerns and forms of anticipation mainly come from the smokers, before all other widely affected parties. 

The series of viral information and online panic were actually triggered as the Public Health Faculty of Universitas Indonesia went public with the result of a survey they had just conducted on the subject. As reported by CNN Indonesia, Hasbullah Thabrany, the lead researcher of the survey, stated that their study has shown that out of the 1,000 random respondents spread in Indonesia, 72% said that they would choose to quit smoking if the price of cigarettes would be tripled, or if the rates reaches IDR.50.000,-/ pack. He also added that 80% out of the passive smokers, and 76% or the active smokers among the survey's respondents agreed for the price of cigarettes to be raised.

While plenty of publications have put emphasis on the fact that the numbers corresponding to the "ideal" cigarette rate does not exactly represent the likely ratio or percentage of the already existing plan on the government's side to increase the tobacco tax in Indonesia next year, information containing of the so-called adjusted prices of various brands of cigarettes effective per September 2016, keeps on going viral on different social media and messaging platforms.

CNN Indonesia also reported that during a press conference held on Monday (8/22/2016), the Minister of Finance, Sri Mulyani, also commented on the related ongoing rumors. She stated that the Ministry of Finance is still in the process of reviewing the proportional increase on the tobacco tax, and therefore there has not been any determined price adjustments for the cigarette retail price.

In a separate meeting, Custom & Excise Director General, Heru Pambudi, reportedly stated that the tobacco tax hike will be announced three months before its effective date. He also added that in the history of the previous practices, the government always enforces new tax tariffs per January 1 in the following year.

Like the Minister of Finance, he also added that the tax increase is still being reviewed, and that aside the health factor, the government also needs to put into consideration the other factors such as the 'fate' of the tobacco industry which involves millions of workers and farmers. Besides, they also have to take into account the purchasing power of the consumers and everyone who will be affected in the whole chain. 

So in conclusion, first of all, the number IDR.50.000,- is indeed something that came up as a result of a survey, and proposed to the government as merely a suggestion to help reduce the number of percentage of smokers in Indonesia. Second of all, the government is indeed working on a new rate for the tobacco tax, one that doesn't "kill" anyone, yet can help to gradually dial down the ridiculously popular smoking culture especially among the underage, while of course also increase the government's tax on tobacco, which is reportedly already as high as IDR. 139.5 trillion last year.


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January, 2018
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