Mrs. Sri Mulyani, Association Asks To Not Increase Excise On Tobacco Products In 2022: In Semester I 2021 Many Shops Are Closed

JAKARTA - The Indonesian Nicotine Conveying Entrepreneurs Association (Appnindo) hopes that the excise rate on tobacco products or CHT, especially for other tobacco products (HPTL) such as liquid vapes, aka electric cigarettes, will not increase next year given the sluggish condition of the industry due to the COVID-19 pandemic.

The chairman of Appnindo Roy Lefrans said that in the first semester of 2021 HPTL sales had fallen by 50 percent and by the end of this year it is estimated that the decline in sales will increase by around 30 percent.

"Many shops are permanently closed and producers end up reducing production. Production is falling, automatically making producers put the brakes on excise orders. We hope the government is wiser in determining policies related to excise. The option to maintain the excise burden is the most appropriate for the current conditions," Roy said in his statement, quoted from Antara, Tuesday, September 14.

In addition, Roy continued, maintaining the HPTL excise burden can also be useful in limiting the circulation of illegal HPTL. Referring to the Customs data of the Ministry of Finance in 2018, there were 218 actions against illegal HPTL products with a value of goods resulting from prosecution (BHP) of Rp. 1.59 billion. Meanwhile, in 2019, the prosecution decreased to 104 cases with a BHP value of Rp522 million.

This is more or less seen as reflecting that HPTL actors are quite obedient in paying excise. It is hoped that the increase in the excise burden will not cause new polemics related to illegal HPTL.

Meanwhile, Chairman of the TAR Free Coalition (Kabar) Ariyo Bimmo said, apart from maintaining the excise burden for HPTL, the government is also expected to make special excise regulations for HPTL.

"Special regulations or PMK clearly need to exist, because HPTL products have different risk profiles. The spirit of excise supervision is a matter of risk profile. When the risk of a product is lower, the calculation should be different and lower," said Ariyo.

HPTL excise provisions are still regulated in PMK 146/2017 concerning Tobacco Products Excise Tariffs. The regulation regulates the excise duty of all tobacco products.

Ariyo also added that because they have harm reduction properties, HPTL products can be an alternative solution for adult smokers. He even supports providing incentives for HPTL products to be more accessible to adult smokers in order to reduce smoking prevalence.

"The government should be able to look more broadly. The increase in CHT can be balanced with incentives for HPTL players who continue to innovate so that their products can be much lower risk. So that adult smokers can get access to low-risk products," said Ariyo.

Trisakti University public policy observer Trubus Rahardiansyah also agreed with this. He said, there is an urgency for the existence of a special regulation on HPTL because there are more HPTL users. It is now estimated that there are up to 2 million HPTL users in Indonesia.

"The number of HPTL users is increasing, so it is necessary to make separate regulations so that the industrial ecosystem can also develop. Because this product is also a different product from cigarettes, so it needs to be regulated differently," said Trubus.

Trubus added that incentives are also important because the majority of HPTL actors are micro, small and medium enterprises (MSMEs) and are labor-intensive so they play an important role in the aspect of employment. Incentives can also be given related to investment in the HPTL industry.

Previously, the Minister of Finance Sri Mulyani Indrawati planned to increase the excise tariff on tobacco products (CHT) in 2022, which was motivated by health factors to the workforce.

“For CHT there is an increase target. As usual, we will explain the CHT policy once we have formulated some of the CHT rates," he said in a press conference on the Financial Note and the 2022 State Budget Bill, Monday, August 16. On the other hand, Sri Mulyani still has not explained in detail the plan to increase The CHT rate is considering the government must formulate various policies first.

Sri Mulyani explained that the plan to increase the CHT rate was based on several factors, first from the health side because it was a measure to control the prevalence of child smokers.

The second is in terms of labor, especially workers who work in the Tobacco Products Industry (IHT) and the third is considering the sustainability of tobacco farmers.

Then the fourth factor is the calculation of the increase in CHT rates on state revenues and the fifth is an effort to eradicate illegal cigarettes.