10% Increase in Tobacco Consumption Tax Law in Indonesia

The tobacco consumption tax rate is set to increase by 10% in 2023 and 2024. According to Mukhamad Misbakhun, a member of the DPR's eleventh committee, this will have a significant impact on the industry and may even lead to its demise.

This impact is actually stifling the industry. The most obvious reason for this is the decrease in cigarette production, which is currently happening," Misbakhun said on Tuesday (6/12/2022).

Misbakhun emphasized that another impact of the increase in tobacco consumption tax is the encouragement of inflation in the region. As a result, tobacco farmers are the victims of the increase in tobacco consumption tax.

In fact, Misbakhun said that farmers are considered one of the most important links in the tobacco industry cycle in Indonesia.

These farmers have never been included in any development plans, whether it's the tobacco consumption tax revenue sharing fund or the agriculture department's budget confirmation," he said.

Whether it's fertilizer subsidies, seed subsidies, pesticide subsidies, or any other form, tobacco farmers don't even have a budget of one rupee," he added.

Earlier, the government announced through the Ministry of Finance that the tobacco consumption tax (CHT) will be increased on November 3, 2022.

It is expected that the average increase in the traditional cigarette consumption tax over the next two years will be 10%. Over five years, the average growth rate for the electronic cigarette (REL) group is expected to be 15%.

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