Reasons For Electric Cigarette Tax Up 10%: Here's Sri Mulyani's Answer

YOGYAKARTA - Finance Minister Sri Mulyani Indrawati has started imposing an electric cigarette tax of 10% of cigarette excise which is valid from January 1, 2024. Want to know the reason for the increase in the electric cigarette tax?

These requirements are contained in the Regulation of the Minister of Finance (PMK) Number. 143/2023 concerning Procedures for Levy, Cutting, and Deposit of Cigarette Taxes, Director General of Financial Balance at the Ministry of Finance Luky Alfirman said that the consideration of implementing the electric cigarette tax is to provide justice to industry players.

"The main consideration of the implementation of the e-cigarette tax is not because of the revenue aspect, but also because it provides justice or level of playing field," he said at the Press Conference of our State Budget, Tuesday (2/1/2024).

Luky stated that the imposition of cigarette taxes on conventional cigarettes involving tobacco farmers, as well as cigarette factory workers, had been in effect since 2014.

Furthermore, he conveyed that state revenue from the imposition of a very small e-cigarette tax, namely only Rp175 billion in 2023 or 10% of the electricity cigarette excise of Rp1.75 trillion.

Meanwhile, the receipt of the e-cigarette excise tax is also still small, which is only 0.82% of the total excise revenue of tobacco products. Business noted that the government still provides relaxation so as not to use the electric cigarette tax during the imposition of excise on e-cigarettes in 2018.

This is an effort to provide sufficient transition period on the implementation of cigarette taxes which are levies on cigarette excise that have been implemented since 2014 as the mandate of Law Number 28/2009.

Cigarette Excise Increases 10% Also This Year

Similar to e-cigarette excise, cigarette excise or tobacco excise (CHT) also experienced an increase in tariffs of 10 percent or more in 2023 and this year. This is in accordance with the Regulation of the Minister of Finance (PMK) No. 191 of 2022 concerning Tobacco Products Excise Tariffs in the Form of Cigarettes, Cigarettes, Leaf Cigarettes or Klobots and Tobacco Iris.

On November 4, 2022, Minister of Finance (Menkeu) Sri Mulyani had said there was an increase in CHT rates for several groups. For example, the CHT tariff for machine kretek cigarettes (SKM) I and II which experienced an increase of 11.5 to 11.75 percent.

Meanwhile, the CHT tariff for machine white cigarettes (SPM) I and II also experienced an increase of 11 to 12 percent and food kretek cigarettes (SKP) I, II, and III of 5 percent.

"Today, it was also decided to increase the excise duty of electronic cigarettes, namely an average of 15 percent for e-cigarettes and 6 percent for HTPL," Sri Mulyani said in her official explanation.

Reasons For Cigarette Excise To Rise

Sri Mulyani revealed why the government increased cigarette excise for 2 years or multiyears, namely in 2023 and 2024. He said that the increase in cigarette excise was tried to regulate the manufacture and consumption of cigarettes.

With this decision, Sri Mulyani hopes that people's affordability to buy cigarettes will decrease.

"In previous years, where we increased cigarette excise which resulted in cigarette prices increasing," he said.

"So that the affordability or affordability of cigarettes will also decrease. Thus, it is hoped that consumption will decrease," explained Sri Mulyani.

He added that the government participated in compiling excise instruments that considered several aspects. Some of the aspects that Sri Mulyani means consist of the cigarette industry to agricultural workers.

Another thing that has attracted the attention of the government is the target of reducing the prevalence of child smokers, who are still 10 to 18 years old to 8.7 percent.

"Hopefully the explanation above can be an answer for those of you who ask, 'The Electric Corner Is Getting More Mahal'?

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