Malang (ANTARA) \u2014 Senior Researcher at the Centre for Economic Policy\nResearch, Faculty of Economics and Business, Brawijaya University (UB),\nJoko Budi Santoso, has projected that if enforcement against illegal\ncigarettes is not completed, the tobacco products industry (IHT) sector\nwill remain under pressure.<\/p>\n
\u201cProduction declines will continue, with legal factory cigarette\nproduction in 2025 reaching 307.8 billion sticks, a fall of\napproximately 3 per cent from 2024, whilst excise revenue will only\nreach 92.10 per cent of target, or roughly Rp211.9 trillion against a\ntarget of Rp230.09 trillion in 2025,\u201d said Joko Budi in Malang, East\nJava, on Sunday.<\/p>\n
He stated that the production decline has occurred over the past\nthree years due to the onslaught of illegal cigarettes and excessively\nburdensome excise policies, whilst public purchasing power has remained\nrelatively stagnant.<\/p>\n
He assessed that the plan to add new tiers to absorb illegal\ncigarettes into the legal framework as a means of addressing lost state\nrevenue from rampant illegal cigarettes is misguided, as the projected\nrevenue from such a policy would be insignificant.<\/p>\n
\u201cThis policy would instead damage the business climate in the IHT\nsector and disregard cigarette manufacturers that have already complied\nwith taxation and excise regulations,\u201d he said.<\/p>\n
Instead, he continued, enforcement against illegal cigarettes should\nbe strengthened through greater allocation of law enforcement resources,\nincluding increased budget allocation for illegal cigarette enforcement\nand a revision of the tobacco excise revenue-sharing fund (DBHCHT) usage\nfrom 10 per cent to at least double that figure, which could be\nincorporated into a revision of Finance Minister Regulation (PMK)\n72\/2024.<\/p>\n
Furthermore, the seriousness of enforcement against illegal\ncigarettes should be bolstered through synergy among law enforcement\nagencies, as customs teams are too limited to cover the distribution\nareas of illegal cigarettes. The key, he said, is penetrating production\nareas and dismantling the producers entirely.<\/p>\n
For this reason, Joko stated, market protection by the government is\nnecessary so that excise revenue can recover.<\/p>\n
The IHT sector, he noted, plays a strategic role not only in state\nrevenue but also in employment absorption and various IHT linkages such\nas tobacco and clove farming, micro, small and medium enterprises\n(MSMEs), and various business operators across the IHT supply chain.\nApproximately 6 to 7 million business operators and employees in the\nsector could be at risk.<\/p>\n
According to Joko, government policy aimed at increasing state\nrevenue \u2014 including the effort to add excise tiers \u2014 should be\nreconsidered and studied more thoroughly, with various stakeholders,\nparticularly cigarette manufacturers, invited to formulate more\nappropriate policies for the fairness and sustainability of the IHT\nsector.<\/p>\n
\u201cThe addition of excise tiers must not end up damaging the business\nclimate of the IHT sector whilst having no significant impact on state\nrevenue,\u201d he said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/brawijaya-university-researcher-crackdown-on-illegal-cigarettes-must-be-completed-1771769620", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }