According to recent reports by the Indonesian national news agency ANTARA, tobacco tax revenue in the Central Java region of Indonesia has reached 2.57 trillion Indonesian rupiah in the third quarter of 2023, accounting for 64.6% of the annual tax revenue target of 398 trillion Indonesian rupiah. Officials in Central Java expressed their commitment to achieving the target by the end of the year.
Due to annual increases in taxes, mainly attributed to non-fiscal stimulus measures such as deferred tobacco tax payments and an increase in demand for standard cigarette tax, there have been challenges in achieving the desired revenue from tobacco taxes, as acknowledged by So Pan. These challenges include a decrease in tobacco consumption and a shift from hand-rolled cigarettes to machine-rolled cigarettes, resulting in a decline in tobacco tax income, as the tax on machine-rolled cigarettes is higher than that on hand-rolled ones.
Furthermore, he pointed out that the shift in consumption from traditional cigarettes to e-cigarettes by smokers would also lead to a decline in tax revenue due to the lower taxes imposed on e-cigarettes.
Furthermore, due to the circulation of illicit tobacco, the authorities in Kudos have initiated enforcement operations within their jurisdiction. These efforts will also contribute to boosting the tax revenue from legal tobacco, as the market share of illicit tobacco can be captured by legitimate tobacco.
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