Govt to raise minimum cigarette prices<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
The government has decided to raise the minimum retail price
\nfor cigarettes starting Dec.1 to increase tax revenue intended to
\ncover the state budget deficit.<\/p>\n
Minister of Finance Boediono said he was optimistic the
\nexpected increase in tax revenue from the cigarette industry
\nwould be enough to cover the budget deficit this year even if the
\ngovernment could not meet its revenue target from privatization
\ndivestment programs.<\/p>\n
He, however, did not provide figures detailing the rise in
\ngovernment revenue from the cigarette retail price hike. The
\ngovernment earlier targeted a cigarette excise tax of around Rp
\n17 trillion this year and about Rp 22.35 trillion in 2002.<\/p>\n
The government projected a budget deficit of Rp 54.3 trillion
\n(US$5.17 billion) or 3.7 percent of gross domestic product this
\nyear.<\/p>\n
Under the plans, the minimum retail price for cigarettes would
\nbe increased by between Rp 45 and Rp 70 per stick.<\/p>\n
The minimum price for hand-rolled cigarettes will be raised by
\nRp 60 to Rp 315 per stick, prices for machine-rolled cigarettes
\nby Rp 75 to Rp 400 per stick, while prices for non-clove or white
\ncigarettes by Rp 252.5 per stick.<\/p>\n
The government uses minimum retail prices as the basis for
\ncalculating the excise tax owed by cigarette makers.<\/p>\n
Companies are permitted to set their retail prices at a level
\nhigher than the government's minimum retail price. Cigarette
\ncompanies usually rank among the country's largest corporate
\ntaxpayers.<\/p>\n
There have been worries that the government would not be able
\nto plug the shortfall in the current budget given the slow
\nprogress in the implementation of the privatization and
\ndivestment programs.<\/p>\n
To cover the Rp 54.7 trillion, the government expected Rp 27
\ntrillion from the sales of assets controlled by the Indonesian
\nBank Restructuring Agency (IBRA). However, IBRA said it expected
\nto collect Rp 24 trillion by the end of this month.<\/p>\n
The government has also targeted Rp 6.5 trillion in revenue
\nfrom the privatization of state-owned companies. But so far, the
\nprogram has yielded nothing.<\/p>\n
One of the major state assets the government has planned to
\nsell this year is Semen Gresik, but it has so far failed to
\nrealize this plan due to strong opposition from people in the
\nprovinces of West Sumatra and South Sulawesi, where the company
\nhas its operations.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-raise-minimum-cigarette-prices-1447893297",
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"sponsor": "Okusi Associates",
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