Official Cigarette Excise Rates Rise, Entrepreneurs: We Are Just Compliant Rather Than Making A Fuss

Illustration. (Photo: Unsplash)

JAKARTA - The increase in cigarette excise tax by 12.5 percent is officially enforced as of today, February 1, 2021. The increase in cigarette excise will have an impact on cigarette price increases. This policy also reaps the pros and cons of a number of circles.

The Secretary General of the Indonesian Cigarette Manufacturers Association (GAPPRI) Willem Petrus Riwu declined to comment on the increase in cigarette excise rates. However, he stressed, will follow the government's decision.

"We just accept it. After all we have conveyed (input) to the government. Instead of making noise, I just kept quiet. We have talked, have discussed, everything. But if the government decides, we will obey," he said, when contacted by VOI , in Jakarta, Monday, February 1.

Previously, the Cigarette Manufacturers Association (Gappri) asked the government to first absorb the aspirations of business actors before determining the tobacco excise tariff (CHT) in 2021.

Chairman of the GAPPRI Association Henry Najoan said the tobacco processing industry was one of the industries affected by the COVID-19 pandemic. Therefore, he hopes that the increase in excise rates can take these conditions into account.

Not only about the pandemic, continued Henry, the tobacco products industry (IHT) is also experiencing pressure from the increase in CHT this year. Therefore, the plan to increase the CHT 2021 tariff in the range of 13 percent to 20 percent by the fiscal authority is not the right choice in the eyes of business actors.

"It is not reasonable, because industrial performance is decreasing due to weakening purchasing power due to a pandemic and a very high excise increase in 2020," he said, in an official statement, Monday, November 23, 2020.

Currently, Henry said, IHT needs time for business recovery due to the COVID-19 pandemic. Tax policy support in the form of not increasing cigarette excise rates is actually a big hope for IHT business actors.

With the unchanged CHT rates, the tobacco processing business recovery process will be faster. At the same time, the policy will sustain hundreds of thousands of jobs in the tobacco products industry.

Moreover, he said, the CHT tariff hike policy plan has never been communicated to business actors. Because the Gappri Association hopes that the formulation of these policies should be carried out in a transparent and measured manner, not at the expense of IHT

In the future, the Gappri Association hopes that IHT will be given the opportunity to recover at least two years. He also hopes that the government will listen to the aspirations of business actors, so that objective considerations will be wiser and more harmonious.

"One of the aspirations of business actors that should be considered is not to increase the excise on cigarette tobacco. This is because the IHT was hit twice by storms. The storm was due to a 23 percent increase in excise and 35 percent of retail selling price (HJE) and the COVID-19 pandemic," he said.

Meanwhile, Minister of Finance (Menkeu) Sri Mulyani Indrawati said, although in general the increase was 12.5 percent, but for each group or class the increase was different.

The details are Machine Kretek Cigarette (SKM) 2B and Machine White Cigarette (SPM 2B the rate increase is higher than SKM 2 A and SPM 2A. This is aimed at narrowing the tariff gap or as a signal of simplification. Meanwhile, for Hand Kretek Cigarettes (SKT) ) determined that the excise tariff will not increase.

"So, the bandrol price will be adjusted according to the increase in tariffs for each group, which is different, although in general the total increase is 12.5 percent," he said, as quoted by YouTube DPR, Saturday, January 30.

The increase in cigarettes this year is based on the following categories and rates:

- SKM I increased by 16.9 percent, the excise tariff was Rp.865 per stick

- SKM IIA increased by 13.8 percent, the excise tariff was IDR535 per stick

- SKM IIB increased by 15.4 percent, the excise tariff was Rp.525 per stick

- SPM I increased 18.4 percent, the excise tariff was Rp935 per stick

- SPM IIA increased by 16.5 percent, the excise tariff was Rp.565 per stick

- SPM IIB increased by 18.1 percent, the excise tariff was IDR 555 per stick

Meanwhile, for the SKT IA, SKT IB, SKT II, and SKT III groups there was no increase at all or 0 percent.