Govt turns to smokers to boost revenue<\/p>\n
Urip Hudiono, The Jakarta Post\/Jakarta<\/p>\n
Attempting to strike two birds with one stone, the government
\nwill raise the retail price of cigarettes by up to 20 percent to
\nincrease state revenue from excise as well as discourage smoking
\nin the country, the finance minister said.<\/p>\n
The price increase could mean that the government is turning
\nto smokers to help balance a likely ballooning of fuel subsidies
\nthat could result in a widening of the budget deficit.<\/p>\n
Minister of Finance Jusuf Anwar said on Friday the government
\nwas planning to raise cigarette prices by between 15 percent and
\n20 percent so it could meet the excise revenue target.<\/p>\n
\"We will not raise excise tariffs this year, but raise the
\nretail price of cigarettes instead,\" he said. \"We expect to be
\nable to do this starting July, and that will help increase excise
\nrevenue.\"<\/p>\n
Under the prevailing excise law, the government sets the
\nminimum cigarette retail price as a benchmark to charge excise
\nduty, so raising the base price would boost excise revenue. It
\nkept cigarette retail prices unchanged last year to boost sales
\nafter an aggressive increase in 2003 saw lower consumption.<\/p>\n
As stated in the revision for the 2005 state budget, the
\nexcise revenue target was increased to Rp 31.4 trillion (US$3.3
\nbillion) from a previous target of Rp 28.9 trillion. The ministry
\nrecently reported that excise revenue had as of May reached Rp
\n10.54 trillion.<\/p>\n
Jusuf further expected that the price increase would also
\ndiscourage smoking, to which some 70 percent of the country's 220
\nmillion population are addicted.<\/p>\n
\"The price hike will be among our commitments for the
\nFramework Convention on Tobacco Control (FCTC),\" he said,
\nreferring to an international smoking-reducing treaty that came
\ninto effect in February. In several FCTC-compliant countries,
\nsmokers are indeed compelled to dig deeper into their pockets to
\nsatisfy their habit.<\/p>\n
Jusuf said, however, that the government would be cautious in
\nimplementing the price hike, to avoid hurting consumption and the
\ntobacco industry, which accounts for 90 percent of excise
\nreceipts.<\/p>\n
\"We will carefully study at what level the price hike would
\nnot significantly affect consumers' purchasing power,\" he said.<\/p>\n
\"I have also discussed with the Ministry of Industry the
\npossible effects on production costs and the employment capacity
\nof the tobacco industry.\"<\/p>\n
Nevertheless, share prices of the country's largest cigarette
\nmaker, PT Gudang Garam, fell 4.6 percent to Rp 13,450 when the
\nnews broke.<\/p>\n
Similarly, share prices of rival PT HM Sampoerna also dropped
\n1.8 percent to Rp 8,200, with the Jakarta Stock Exchange
\nComposite Index gaining only slightly by 0.7 percent to 1061.50
\npoints.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-turns-to-smokers-to-boost-revenue-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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