In its latest research, the Center for Indonesia\u2019s Strategic\nDevelopment Initiatives (CISDI) proposes uniforming the tobacco excise\nstructure to suppress consumption and increase state revenue. The reason\nis that the increasing number of structures creates a variety of price\noptions, allowing consumers to switch to cheaper cigarettes\n(downtrading).<\/p>\n
To date, there are eight excise structure groups in force in\nIndonesia for machine-made cigarettes and hand-rolled clove cigarettes\n(SKT). Muhammad Zulfiqar Firdaus, Health Economics Research Associate at\nCISDI, stated that more structure space increasingly accommodates the\nindustry in producing various cigarette variants, including cheap\nones.<\/p>\n
\u201cThat\u2019s where the downtrading phenomenon emerges. From a consumption\nperspective, it certainly has a significant impact; people don\u2019t stop\nsmoking because cheap cigarettes are always available in the market,\u201d\nZulfiqar said during the dissemination of CISDI\u2019s research on Thursday,\n16 April 2026.<\/p>\n
The proposal for uniforming and simplifying tariffs is outlined in\nCISDI\u2019s latest research titled \u2018Reformasi Cukai Rokok di Indonesia:\nSimulasi Proyeksi Peningkatan Penerimaan Negara dan Kesehatan\nMasyarakat\u2019 (Tobacco Excise Reform in Indonesia: Simulation of\nProjections for Increasing State Revenue and Public Health). There are\nthree excise reform scenarios proposed in the research.<\/p>\n
The first scenario is a uniform annual tariff increase. This involves\nraising the excise tariff by 10 percent per year for machine-made\ncigarettes and 20 percent per year for hand-rolled cigarettes over the\nnext two years.<\/p>\n
Second, simplification of the excise structure for machine-made\ncigarette groups. In this scenario, CISDI proposes simplifying the\nexcise structure by merging machine-made cigarette groups (SPM 1 with\nSKM 1 and SPM 2 with SKM 2) in the first year. This is followed by an\nannual excise tariff increase of 10 percent for machine-made cigarettes\nand 20 percent for hand-rolled cigarettes in the first and second\nyears.<\/p>\n
The third scenario is simplification of the excise structure for\nhand-rolled cigarette groups. This involves simplifying the excise\nstructure by merging hand-rolled cigarette groups (SKT\/SPT 1A with\nSKT\/SPT 1B and SKT\/SPT 2 with SKT\/SPT 3) in the first year, followed by\nan annual excise tariff increase of 10 percent for machine-made\ncigarettes and 20 percent for hand-rolled cigarettes in the first and\nsecond years.<\/p>\n
The results of CISDI\u2019s research show that from these proposals, the\nthird scenario produces the largest cigarette price increase,\nconsumption decrease, and revenue increase. In its research, CISDI\npresents calculations of the impacts.<\/p>\n
From the price perspective, if the first scenario is implemented\nthroughout 2025-2026, the average cigarette price will rise by Rp 100\nper stick. If the second scenario is implemented, the cigarette price\nincrease will be Rp 120 per stick. The average cigarette price will rise\nby Rp 166 per stick if the third scenario is implemented.<\/p>\n
All scenarios will result in positive growth in excise revenue. If\nthe first scenario is run, for example, it will add Rp 15.33 trillion to\nexcise revenue during 2025-2026. For the second and third scenarios,\nexcise revenue will increase by Rp 17.7 trillion and Rp 24.3 trillion,\nrespectively.<\/p>\n
Total state revenue will also increase in all scenarios implemented.\nFrom 2025 to 2026, the total additional state revenue is projected to\nreach Rp 16.8 trillion if the first scenario is implemented. If the\nsecond and third scenarios are implemented, the additional state revenue\nwill reach Rp 19.4 trillion and Rp 25.2 trillion, respectively.<\/p>\n
Conversely, in CISDI\u2019s calculations, without excise reform, state\nrevenue will stagnate. In fact, total state revenue risks declining due\nto market share shifts driven by price elasticity, cross-prices, and\nincome.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/why-uniforming-the-tobacco-excise-structure-prevents-downtrading-1776325849", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }