Illegal Cigarette Sales and Tax Evasion in Magelang, Indonesia
According to a January 9 report by the Indonesian newspaper "KOMPAS," despite the government's ongoing efforts to increase cigarette taxes, there is still illegal sale of cigarettes occurring in Magelang City, located in Central Java Province. In these locations, some illegal cigarettes are using counterfeit tax stamps.
Since January 2024, the government has implemented an upgraded tobacco tax rate policy. According to Regulation No. 191 issued by the Ministry of Finance in 2022, the tobacco tax for traditional cigarettes has increased on average by 10%, while the tax rate for e-cigarettes has risen by an average of 15%. Additionally, the average tax rate for other tobacco products has increased to 6%.
This policy has prompted some smokers to reconsider their expenses, such as 33-year-old Fajar Dharmawan. He stated that due to the increase in tobacco taxes in 2021, he has turned to the relatively more affordable option of e-cigarettes.
Although this tax policy may seem to swiftly restrain user behavior, its objective is not only to control health issues caused by cigarettes but also to increase government revenue.
The Indonesian tobacco industry aims to achieve a tax revenue target of 230.4 trillion rupees in 2023, accounting for 95% of the total tobacco tax revenues for that year.
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