New excise tax affects regular cigarette prices<\/p>\n
JAKARTA (JP): The newly applied cigarette excise tax scheme
\nputs makers of regular cigarettes at a disadvantage as it
\neliminates their control over retail prices, an analyst said here
\non Monday.<\/p>\n
David Jap of Trimegah Securindolestari said the new rule would
\nforce makers of regular cigarettes to raise their retail prices,
\nlikely making their products less competitive.<\/p>\n
\"Under the new scheme, they must follow government-set retail
\nprices. In other words, they must increase their retail prices.
\nThis will lead them to head-on competition with clove cigarette
\nmakers,\" he told The Jakarta Post<\/p>\n
He said makers of regular cigarette previously sold their
\nproducts at much lower prices than clove cigarette makers.<\/p>\n
The clove cigarette industry has experienced three price hikes
\nsince November 1997 as regulated by the government, Jap said.<\/p>\n
The Indonesian government adopted, beginning on April 1, a new
\ncigarette excise tax scheme which unifies the tax ruling on
\nmachine-rolled clove cigarettes and machine-rolled regular
\ncigarettes.<\/p>\n
Under the scheme, excise tax on machine-rolled clove and
\nregular cigarettes produced by big companies and with a minimum
\nretail price of Rp 225 (2.5 U.S. cents) per cigarette is 36
\npercent.<\/p>\n
The excise tax on machine-rolled clove and regular cigarettes
\nproduced by medium-size companies, with a minimum price of Rp 180
\nper cigarette, is 30 percent. A 28 percent excise tax is imposed
\non similar cigarettes if their per cigarette prices are between
\nRp 150 and Rp 175.<\/p>\n
The ministry imposes a 22 percent tax on machine-rolled clove
\nand regular cigarettes made by small companies, with prices
\nbetween Rp 130 and Rp 145 per cigarette. A 20 percent tax is,
\nhowever, tagged for similar cigarettes that sell for between Rp
\n110 and Rp 125.<\/p>\n
For hand-rolled cigarettes, the government imposes a 16
\npercent excise tax for those produced by big companies and a
\nminimum per cigarette price of Rp 150.<\/p>\n
For hand-rolled cigarettes made by medium-sized companies with
\nprices ranging between Rp 100 and Rp 145, the tax is 8 percent,
\nwhile tax on hand-rolled cigarettes produced by small firms, with
\nprices ranging between Rp 10 and Rp 95, is 4 percent.<\/p>\n
Adi Harnadi, secretary-general of the Association of
\nIndonesian Cigarette Producers, said the impact of the new
\nregulation should not be too big on makers of regular cigarettes
\nbecause they would not have to change their prices at once.<\/p>\n
\"There is a transition period of between two and three years
\nfor them to adjust their retail prices. That will help them much
\nin adapting to the new scheme,\" he told the Post.<\/p>\n
Large-scale producers of regular cigarettes have been given a
\ntwo-year transition period in which they will be able to adjust
\ntheir prices by 60 percent during the first year, he said.<\/p>\n
While medium and small-scale manufacturers have been given a
\nthree-year transition that will enable them to adjust their
\nprices by 45 percent in the first year, he added.<\/p>\n
\"It is the first time the government has applied the same
\nregulation regarding excise tax and retail price to both makers
\nof clove and regular cigarettes,\" Adi said.<\/p>\n
Previously only clove cigarette makers had to follow
\ngovernment-set prices, he said.<\/p>\n
Adi said the new regulation had narrowed the price gap between
\nclove and regular cigarettes.<\/p>\n
\"Previously, a medium-scale regular cigarette maker could sell
\none cigarette for only Rp 50, while a medium-scale clove
\ncigarette maker had to sell his for Rp 175 each,\" he said.<\/p>\n
\"But that's not regular cigarette makers' fault because they
\nwere only following the regulation,\" he said.<\/p>\n
Adi said the new scheme also simplified the categorization of
\ncigarette manufactures from four groups comprising large, medium,
\nmedium-to-lower and small-scale to three groups by eliminating
\nthe medium-to-lower scale. (cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-excise-tax-affects-regular-cigarette-prices-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}