JAKARTA \u2013 The plan by Finance Minister Purbaya Yudhi Sadewa to\nintroduce a new excise tax layering scheme for cigarettes without\nincreasing the tobacco excise duty (CHT) rates has been positively\nreceived by tobacco industry players. The policy is seen as a buffer for\nthe industry amid pressures from declining consumer purchasing power and\nglobal economic uncertainties.<\/p>\n
Benny Wachjudi, Chairman of the Indonesian White Cigarette\nManufacturers Association, stated that the proposal provides breathing\nroom for businesses that have faced significant fiscal burdens in recent\nyears.<\/p>\n
\u201cFor us, this tobacco ecosystem will receive fresh air amid the\nunconducive and uncertain global macroeconomic constellation,\u201d Benny\nsaid in an official statement on Tuesday (12\/5\/2026).<\/p>\n
According to him, the industry needs policy certainty to maintain\nbusiness sustainability and employment absorption. Therefore, the\nassociation also proposes a moratorium on excise tax and retail selling\nprice (HJE) increases for the next three years.<\/p>\n
\u201cWe hope there will be no increases in excise tax and HJE for the\nnext three years,\u201d Benny said.<\/p>\n
Benny noted that the decline in legal production does not\nautomatically reduce cigarette consumption. Instead, consumption shifts\nto illegal products, which are now estimated to account for 14 to 15\npercent of the market.<\/p>\n
He assessed that the legal industry faces heavy pressure because it\nmust bear various levies such as excise, VAT, and regional taxes,\ntotaling around 70 percent of the product price.<\/p>\n
\u201cNormatively, no economic activity can compete with others that have\nproduction costs 70 percent cheaper,\u201d he said.<\/p>\n
\u201cWe welcome the Finance Minister\u2019s statement with relief. This is not\njust about numbers on paper. For us, the certainty of no tax increase is\ngood news that is directly felt on the ground,\u201d said Sulami.<\/p>\n
According to her, the tobacco industry involves a long economic\nchain, from tobacco farmers in Temanggung and Lombok, clove farmers in\nMaluku, to rolling workers in Central Java and East Java.<\/p>\n
Sulami stated that the sector absorbs around 6 million workers\ndirectly and indirectly, so fiscal policy changes are seen to have broad\nimpacts on the social and economic conditions of the community.<\/p>\n
She also recalled that CHT rates from 2020 to 2023 increased on\naverage by more than 10 percent per year, even reaching 12 percent for\nmachine-made kretek cigarettes in group I in 2023. This condition is\nsaid to have pressured legal cigarette production and expanded the\ncirculation of illegal cigarettes.<\/p>\n
\u201cA moratorium is not just fresh air for entrepreneurs, but a shield\nfor the most vulnerable workers, especially rolling labourers in the\nhand-rolled kretek segment with the thinnest margins,\u201d Sulami said.<\/p>\n
Previously, Purbaya Yudhi Sadewa stated that the government is\npreparing a new cigarette excise layering scheme that is considered more\nadaptive to industry conditions, especially people\u2019s cigarettes. After\nthe new structure is implemented, the government emphasised that it will\nclose all illegal cigarette factories without compromise.<\/p>\n
\u201cLater, after that (new excise layer) is in effect, there will be no\nmore illegal cigarette companies that we tolerate. Once detected, shut\ndown,\u201d Purbaya said at the APBN KiTA press conference at the Ministry of\nFinance on Tuesday (5\/5\/2026).<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/cigarette-excise-tax-likely-not-to-increase-industry-requests-3-year-moratorium-1778669830", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }