Commission XI of the Indonesian House of Representatives: Adding a Tax Layer Does Not Sacrifice Industry and Labor

JAKARTA - The government's plan to add a layer (layer) in the tobacco excise tariff structure (CHT) to accommodate illegal cigarettes is considered to be carefully studied so as not to complicate the tax system or burden the country's fiscal condition.

Member of Commission XI of the Indonesian House of Representatives, Thoriq Majiddanor, said that changes to the tariff structure must prioritize the principles of administrative simplicity, supervisory effectiveness, and maintaining a balance between health goals, business sustainability, labor protection, and state revenues.

According to him, eradicating illegal cigarettes is not enough just through changes in tax rates, because the success of the policy also depends on effective supervision, law enforcement, ease of compliance for business actors, and training for the industry.

"We see the government's goal to narrow the scope of illegal cigarettes as a positive step. However, its success does not depend solely on the tariff structure, but also on the effectiveness of supervision, law enforcement, ease of compliance, and training for business actors," he said in a statement, Wednesday, July 8.

Furthermore, he emphasized that the new policy must not harm industries that have always obeyed the rules or threaten the sustainability of millions of workers who depend on the tobacco industry.

According to him, every change in the rules must consider its impact on the business climate and the sustainability of employment, so as not to trigger the reduction of workers, a decrease in investment, and an increase in the risk of layoffs.

"The DPR will encourage that every transition policy is carried out in a measured manner, based on data, and pays attention to the real conditions of industries and workers who depend on the tobacco industry," he said.

Thoriq also reminded that policy changes did not create profits for illegal business actors or certain groups.

According to him, fiscal policy must be able to create healthy business competition, provide certainty for industries that obey the rules, as well as strengthen efforts to eradicate illegal cigarettes.

"We understand the concerns of some industry players. What is clear is that Commission XI believes that fiscal policy must be able to create a healthy and fair business climate. Industries that have been law-abiding must continue to have business certainty, while at the same time the state needs to strengthen efforts to eradicate illegal cigarettes," said Thoriq.