Impact of Increased Tobacco Tax on Smoking Rates in Indonesia

According to a report by Bisnis on May 15th, despite the Indonesian government's policy of increasing tobacco taxes aimed at reducing smokers, statistics show that the current proportion of smokers remains stagnant at 28%. Heri Susianto, the chairman of the Indonesian Tobacco Industry Forum (Formasi), stated that despite the increase in tobacco tax rates, it has not effectively reduced the number of smokers in Indonesia.

According to Heri, based on the National Mid-Term Development Plan 2020-2024, the government's goal is to reduce the smoking rate among children aged 10-18 from 9.1% to 8.7% by 2024. However, achieving this goal is influenced by various factors.

Raising tobacco taxes has not effectively lowered smoking rates to meet the goals of the national mid-term development plan," said Harry.

The Minister of Finance has clearly stated that despite increasing tobacco taxes to raise prices, the number of smokers in Indonesia remains high, with a rising trend. Even with continuous implementation of policies to raise tobacco tax rates and retail prices, Indonesia's smoking rate remains stagnant at around 28%.

The proportion of smokers in the early age group in 2013 was around 7.2%, in 2016 it was around 8.8%, and in 2018 it was around 9.1%. This clearly indicates that raising tobacco taxes did not effectively reduce the proportion of smokers in the early age group.

The government needs to take additional non-financial measures to reduce the proportion of smokers, such as implementing large-scale supervision and education. The main factors affecting smoking rates include environmental factors such as family, school, and peer environments, as well as social culture, psychological education, cognitive factors, and economic factors. All of these factors are interconnected, so the government should start changing its beliefs and methods to reduce the smoking rates among 10-18 year old children.

Helen believes that the tobacco industry should not be responsible for reducing smoking rates, as it already bears a significant financial burden and must comply with other regulations. The tobacco industry indirectly contributes to reducing smoking rates through taxes paid, such as tobacco tax, value-added tax, local tobacco tax, and corporate income tax.

It must be remembered that the tobacco industry is the largest contributor to tax revenue, accounting for 96% of total tax revenue," he said. Therefore, the Treasury Department is adjusting fund allocation to facilitate the implementation of regulations called DBH CHT.

According to Regulation 206 of 2020, 25% of DBH CHT funding will be used for healthcare, including reducing the rate of stunting. He stated that the establishment of a country is to manage the distribution of power. Considering that the tobacco industry has already contributed significantly to the fiscal economy and has complied with relevant regulations, such as placing health warnings and information on tobacco packaging, it should no longer be required to bear the responsibility of reducing smoking rates.