Get Ready, The Government Will Raise Cigarette Excise Rates Again

Illustration. (Photo: Unsplash)

JAKARTA - The government will raise tobacco excise rates (CHT). These increases will be announced at the end of September or early October 2020 and will take effect in 2021.

Director General of Customs and Excise Heru Pambudi said the government would consider a number of aspects to formulate an increase in cigarette excise rates next year. The considerations in question are health factors, industry including clove and tobacco farmers, the acceptance itself and the potential for illegal cigarettes.

"Historically, we, the Ministry of Finance, will announce the end of September or the beginning of October and it will be consistent with the previous ones," he said at the National Budget Conference, Jakarta, Tuesday, August 25.

Heru explained, the decision to increase cigarette excise rates is in line with the increase in the excise revenue target in 2021. He said, next year's excise revenue will increase by 4.8 percent.

"Excise revenues in the next year amounted to Rp. 172.8 trillion or an increase of 4.8 percent compared to 2020 which amounted to Rp. 164.9 trillion," he said.

Meanwhile, the realization of customs and excise revenues reached Rp.109.06 trillion or already reached 53.02 percent of the target or grew by 3.71 percent at the end of July 2020. Referring to the Financial Notes book and the 2021 RAPBN, the excise revenue target in 2021 will increase 3 , 6 percent compared to the outlook for the 2020 fiscal year.

In the 2021 Draft State Budget, excise revenue is targeted at IDR 178.47 trillion. The excise revenue target in 2021, consists of tobacco products excise (CHT) of IDR 172.75 trillion, the rest is targeted at MMEA excise revenue, EA excise, and other excise revenue of IDR 5.71 trillion.

Previously, the government through the Minister of Finance Sri Mulyani Indrawati had set an increase in excise on tobacco products and retail selling prices (HJE) in 2020. These provisions are contained in the Minister of Finance Regulation (PMK) Number 152 of 2019 concerning the Second Amendment to PMK Number 146 of 2017 concerning Tariffs. Tobacco Excise.

This regulation was enacted on 18 October 2019 and promulgated on 21 October 2019.

The increase in excise and cigarette HJE limits will take effect on January 1, 2020, as referred to in Article II Paragraph (2). Meanwhile, excise stamps can be affixed no later than February 1, 2020 as referred to in Article II Paragraph (1) Letter (b) (ii).

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There are 8 types of cigarettes that are regulated in the regulation, either domestically made or imported, in which the amount of excise and HJE cigarettes are listed in Attachments III and IV, respectively.

First, for domestically-made cigarettes, some of which are machine-made kretek (SKM) class I cigarettes with a minimum HJE of IDR 1,700 subject to excise of IDR 740 per stick or gram, up 25.42 percent from IDR 590.

Second, SKM class II for HJE of more than Rp1,275 is subject to a tariff of Rp. 470 per stick or gram, up 22.08 percent from Rp. 385. For HJE cigarettes, Rp1,020 to Rp1,275 are subject to an excise of Rp. 455 per stick or gram, up 22.97 percent from Rp370.

Third, Machine White Cigarettes (SPM) class I with a minimum HJE of Rp1,790 are subject to excise duties of Rp. 790, up 26.40 percent from Rp. 625.

Fourth, hand kretek cigarettes (SKT) and hand white cigarettes (SPT) class I with an HJE of more than Rp1,460 are subject to an excise rate of Rp425, up 16.44 percent from Rp365.

Fifth, Filter Hand Kretek Cigarettes (SKTF) and Filter Hand White Cigarettes (SPTF) with an HJE of IDR 1,700 are subject to excise duties of IDR 740, up 25.42 percent from IDR 590.

Furthermore, imported cigarettes with the SKM type with a retail selling price of Rp1,700 are subject to an excise tax of Rp740.

Seventh, imported SPM cigarettes with a retail selling price of Rp. 1,790 are subject to excise of Rp. 790; Imported SKT cigarettes or SPT with a retail selling price of Rp 1,461 are subject to an excise tax of Rp425. SKTF / SPTF cigarettes with an HJE of Rp1,700 are subject to an excise of Rp. 740.

Meanwhile, the types of tobacco products that did not record a new increase in excise rates were sliced tobacco, leaf cigarettes, fluffy incense cigarettes, and cigars.

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