The proposal to add a new layer or category within the tobacco excise\n(CHT) structure to accommodate illegal cigarettes has drawn significant\nscrutiny, as it is deemed to have the potential to trigger moral hazard\nand disrupt the policy stability currently being established by the\ngovernment. The suggestion to introduce a new tariff tier is being\ncriticised for potentially complicating the tariff system and causing\nmarket distortions, emerging amidst government efforts to maintain\neconomic stability and ensure certainty for business actors.<\/p>\n
Nurhadi, a member of Commission IX of the Indonesian House of\nRepresentatives (DPR RI), warned the government to be cautious in\nformulating this policy to avoid creating false perceptions among the\npublic and industry players. \u201cRegarding the discourse on adding a new\nexcise layer for cigarettes that have been circulating illegally, in\nprinciple, I believe the government must be very careful so that this\npolicy is not interpreted as a form of legalisation for illegal\ncigarettes,\u201d said Nurhadi.<\/p>\n
He noted that if the objective of the policy is to bring illegal\nproducts into the state\u2019s taxation and supervision system,\nimplementation must be strictly enforced without providing tolerance for\nexisting violations. \u201cWe must ensure that moral hazard does not arise,\nwhere illegal industry players simply wait for a new policy to\nautomatically enter the official market,\u201d he added.<\/p>\n
This scrutiny follows statements from Finance Minister Purbaya Yudhi\nSadewa, who confirmed that tobacco excise rates will not undergo changes\nuntil 2027. The government has chosen to maintain existing rates to\npreserve economic stability while strengthening supervision over the\ncirculation of illegal cigarettes. \u201cI will keep it constant, neither\nrising nor falling. I want economic stability first,\u201d Purbaya stated in\nJakarta on Wednesday.<\/p>\n
Amid the ongoing pressures faced by the tobacco industry, changes to\nthe tariff structure are seen as potentially creating uncertainty for\nbusinesses. Such conditions are feared to affect investment planning,\nproduction, and labour absorption. Consequently, efforts to eradicate\nillegal cigarettes through strengthened supervision and law enforcement\nare considered more aligned with the government\u2019s goals of maintaining\neconomic stability and fostering a healthy business climate. Conversely,\nadding a new category to the excise structure is feared to open doors\nfor market distortion and moral hazard, which could hinder efforts to\ncreate a more orderly, competitive, and sustainable industry.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/proposal-for-new-tobacco-excise-layer-urged-to-be-studied-carefully-1780934280", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }