A number of politicians in parliament have voiced concerns about\nrisks arising from the government\u2019s plan to add a new tobacco excise\n(CHT) layer, intended to draw producers of illegal cigarettes into the\nlegal tobacco products industry (IHT).<\/p>\n
Harris Turino, a member of Commission XI of the DPR from the PDI\nPerjuangan faction, said any change to the excise structure must be\nconsidered holistically \u2014 from ensuring it does not weaken oversight\neffectiveness or open new leakage points for state revenue, to avoiding\nfresh distortions for IHT players that have operated legally all\nalong.<\/p>\n
\u201cWhat matters most is not simply adding or removing a layer, but\nensuring the policy design is genuinely effective, measurable, and does\nnot open room for new distortions in the IHT,\u201d he said in a written\nstatement on Friday (10 July 2026).<\/p>\n
From the state revenue perspective, Harris warned that an overly\ncomplex tariff structure could instead trigger a shift of production to\nlower-tariff segments, known as downtrading. This shift, he said, has\nthe potential to reduce state revenue.<\/p>\n
\u201cIn the IHT, an overly complicated tariff structure can sometimes\nactually encourage production shifting to lower-tariff segments. If this\nis not anticipated, state revenue could be eroded,\u201d he said.<\/p>\n
Meanwhile, from the industry side, he argued that excise policy\nchanges that ignore the stability of the business climate would only\npressure the industry\u2019s resilience and fuel the circulation of illegal\ncigarettes.<\/p>\n
\u201cWe must also learn that aggressive tariff increases or structural\nchanges in recent years contributed to pressure on the legal industry\nand gave room for the illegal market to grow,\u201d he said.<\/p>\n
\u201cSo the balance must be maintained. The state needs revenue, but the\nlegal industry that has been compliant must not lose its resilience,\u201d\nHarris said.<\/p>\n
To resolve the problem of circulating illegal cigarettes, Harris\nbelieves what matters is a strong supervision ecosystem, consistent law\nenforcement, and a rational tariff structure, so that businesses see\nthat entering the legal system is genuinely more profitable and\nsustainable.<\/p>\n
\u201cOtherwise, this policy risks merely moving the problem around\nwithout truly addressing its root cause,\u201d Harris said.<\/p>\n
Echoing Harris, Thoriq Majiddanor, a member of Commission XI from the\nNasDem faction, said changes to the tariff structure should in fact\nadhere to the principles of administrative simplicity and supervision\neffectiveness.<\/p>\n
Furthermore, he said the main objective of excise policy must remain\nbalancing health aspects, business sustainability and fairness, worker\nprotection, and state revenue.<\/p>\n
Thoriq viewed supervision effectiveness and law enforcement as\nremaining the primary factors in reducing the circulation of illegal\nproducts, rather than relying on changes to the tariff structure.<\/p>\n
\u201cWe see the government\u2019s aim of narrowing the space for illegal\ncigarettes as a positive step. But its success certainly does not depend\non the tariff structure alone, but also on supervision effectiveness,\nlaw enforcement, ease of compliance, and guidance for businesses,\u201d he\nsaid.<\/p>\n
Thoriq further stressed that the new CHT policy must not end up\nharming the survival of businesses that have fulfilled their obligations\nand absorbed large numbers of workers.<\/p>\n
\u201cThe DPR will push for every transition policy to be carried out in a\nmeasured, data-driven manner, taking into account the real conditions of\nthe industry and the workers who depend on the tobacco products sector,\u201d\nThoriq affirmed.<\/p>\n
He also cautioned that every policy change must not open room for\nadvantage solely to illegal manufacturers or certain business\ngroups.<\/p>\n
\u201cWe understand the concerns of parts of the industry. To be clear,\nCommission XI takes the view that fiscal policy must be able to create a\nhealthy and fair business climate. The industry that has complied with\nthe rules must continue to receive business certainty, while at the same\ntime the state needs to strengthen efforts to eradicate illegal\ncigarettes,\u201d he said.<\/p>\n
Previously, Finance Minister Purbaya Yudhi Sadewa insisted on setting\na new tobacco excise (CHT) layer aimed at drawing illegal cigarette\nproducers into legality.<\/p>\n
He assured that a thorough study would be conducted before proposing\nthe new cigarette excise layer to the DPR, in line with suggestions from\ncouncil members.<\/p>\n
According to him, the Ministry of Finance has not yet held a\nconsultation meeting with the DPR on the new cigarette excise layer, as\nthe study involving all stakeholders is still under way.<\/p>\n
\u201cWe haven\u2019t gone to the DPR yet. So if they ask us to study it, we\nwill certainly study it,\u201d Purbaya said when met at the Tanjung Priok\nport area in Jakarta on Tuesday (23 June 2026).<\/p>\n
Nevertheless, Purbaya emphasised that the new layer is needed to\naccommodate small cigarette producers that have so far operated\nillegally, so they can become legal producers, as they are not yet\nwithin the domestic excise system.<\/p>\n
\u201cMost of them are large illegal producers. We must find a way, giving\nthem room to come into legality,\u201d he said.<\/p>\n
If the government does not give illegal cigarette producers room to\nenter the legal business system, he said this would create unfairness,\nespecially if the government were to simply shut down their\nbusinesses.<\/p>\n
\u201cIf we want to close down all the illegal ones now, without giving\nthem the chance to become legal, that wouldn\u2019t be fair to them,\u201d Purbaya\nasserted.<\/p>\n
Purbaya said the policy of creating the new cigarette excise layer\nwould certainly not be perfect from the outset. However, he believes the\nnew CHT structure will effectively eradicate the circulation of illegal\ncigarettes.<\/p>\n
\u201cEven if it later turns out imperfect, it will surely be better than\nthe current system, in which illegal cigarettes circulate far too\nwidely,\u201d Purbaya said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/dpr-fears-additional-excise-tariff-layer-could-shake-legal-industry-and-burden-fiscal-position-1783695125", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }