Cigarette Production Will Decrease 3.3 Percent Due To Increased Tax Fee, Will The Number Of Children And Women Smokers Decrease Too?

Illustration. (Photo: Doc. Antara)

JAKARTA - The Fiscal Policy Agency (BKF) of the Ministry of Finance estimates that cigarette production will fall by 3.3 percent this year after the government increases the weighted average tobacco tax rate (CHT) by 12.5 percent on February 1, 2021.

"We have simulated cigarette production in 2021 to drop 2.2 to 3.3 percent", said the Head of the BKF's Excise Sub-Division at the Ministry of Finance Sarno in the Tobacco Control Support Center webinar of the Association of Public Health Experts quoted from Antara, Tuesday, February 2

In his presentation, Sri Mulyani's right hand explained that the total production for all groups, namely Machine Kretek Cigarettes (SKM), Machine White Cigarettes (SPM), and Hand Kretek Cigarettes (SKT) in 2020 reached 298.4 billion sticks.

With the estimated decline in production, the Ministry of Finance estimates that this year's cigarette production volume will drop to around 288 billion sticks.

When compared to 2020, he continued, with an increase in excise on tobacco products by 23 percent, the amount of cigarette production decreased by 11 percent.

The Ministry of Finance, he continued, with an average increase of 12.5 percent in cigarette excise rates, it is also estimated that the affordability index will increase from 12.2 percent to 13.7-14 percent.

Based on the type of group, the increase in excise rates only occurred for SKM and SPM, while SKT was not enforced because of observing the labor-intensive sector and the COVID-19 pandemic situation.

"It shows that with the increase in excise rates in 2021, it indicates that the price of cigarettes will be increasingly unaffordable for the public", he said.

In addition, he continued, the prevalence rate of adult smoking would drop to 32.3 to 32.4 percent and children and adolescents to 8.8 to 8.9 percent.

The decline, he said, was consistent with the 2020-2024 Medium Term Development Plan (RPJMN) target of 8.7 percent in 2024.

Sarno added that this year's excise policy was carried out with a more focus on controlling consumption.

This control, he said, was marked by the higher magnitude of the increase in excise, which was dominant in the SKM class considering that SKM had the largest share of the market, reaching 71.4 percent, and the group that had low local content, namely SPM.

With this excise policy, it is expected to boost state revenues in the excise sector, which this year is targeted to reach IDR 173.78 trillion.

Meanwhile, the achievements during 2020, the revenue of excise on tobacco products reached IDR 170.24 trillion or an increase compared to the realization in 2019 which reached IDR 164.87 trillion.

This achievement was also higher than the target for tobacco excise revenue in accordance with Presidential Decree 72/2020, which reached IDR 164.94 trillion.