Ministry Of Finance: The Increase In Tobacco Excise Tariffs Influences The Circulation Of Illegal Cigarettes In Indonesia

The Directorate General (Ditjen) of Customs and Excise of the Ministry of Finance (Kemenkeu) admitted that the circulation of illegal cigarettes went straight with the increase in tobacco excise rates in Indonesia this year.

Director of Communication and Guidance for Service Users at the Directorate General of Customs and Excise, Nirwala Dwi Heryanto, said the increase in cigarette excise rates would be positive for the circulation of illegal cigarettes in the country.

According to him, the impact of the pandemic has caused people's purchasing power to weaken, while the price disparity between legal and illegal cigarettes is further away.

Not only that, the burden of state levies on high legal cigarettes has made the circulation of illegal cigarettes more widespread.

"Currently, the disparity between illegal cigarettes has reached 68 percent. Previously, before VAT, it increased by around 62 percent, but as soon as VAT rose from 9.1 percent to 9.9 percent, it became 68 percent," Nirwala said in a written statement, Tuesday, November 8.

Nirwala explained that law enforcement against perpetrators of illegal cigarette sales is by imposing administrative and criminal sanctions regulated in Law Number 39 of 2007 amendments to Law Number 11 of 1995 concerning excise.

The sanctions for perpetrators of criminal violations related to the circulation of illegal cigarettes are a maximum imprisonment of five years and/or a maximum fine of ten times the excise value that should be paid.

Therefore, to eradicate the circulation of illegal cigarettes, Customs and Excise continues to increase the supervision of illegal cigarette trafficking through the operation of the "Illegal Cigarette FIGHT".

Based on Customs and Excise records, Operations on Illegal Cigarettes in the 2018-2022 period continued to experience an increase in the number of prosecutions, while the number of goods resulting from prosecution (BPH) tends to decrease every year.

"In 2020, the number of prosecutions amounted to 9,018 with state losses reaching more than Rp662 billion. In 2021, the number of prosecutions rose to 13,125 with state losses reaching Rp293 billion. Meanwhile, currently, the total prosecution has increased to 18,659 with total state losses reaching Rp407 billion," said Nirwala.

Nirwala said that the success of eradicating illegal cigarettes requires the cooperation of many parties, both the government and the community.

"It is hoped that the operation of Illegal CigaretteACKs can increase entrepreneurial compliance so that it can create justice and balance," he said.

For your information, illegal cigarettes are cigarettes circulating in Indonesia, both from domestic and imported products that do not follow the applicable rules in Indonesian jurisdictions.

As for the characteristics of illegal cigarettes, among others, they are not attached to excise stamps (liquitous cigarettes), attached with excise stamps that do not match their designation, are attached with fake excise stamps, and attached with used excise stamps.