Additional Excise Layers Deemed No Guarantee of Eliminating Illegal Cigarettes

The government’s plan to add layers to the tobacco excise tariff (CHT) is considered no guarantee that illegal cigarettes will disappear from circulation. Lead for Tobacco Control at the Center for Indonesia’s Strategic Development Initiatives (CISDI), Beladenta Amalia, said the addition of layers could instead cause cheap cigarettes to increasingly flood the market.

The statement was delivered by Beladenta after a demonstration by the Save Our Surroundings (SOS) Coalition, comprising CISDI, the Indonesia Youth Council for Tactical Changes (IYCTC), and Ruang Kebijakan Kesehatan Indonesia (RUKKI), in front of the Ministry of Finance office on Thursday, 11 June 2026. The civil coalition, staging a satirical action titled the ‘National Cheap Cigarette Programme’, demanded that Finance Minister Purbaya Yudhi Sadewa cancel the plan to add tariff layers.

“We feel there will definitely still be illegal cigarettes. Additional layers will not guarantee that illegal cigarettes will voluntarily enter the existing system. Because of course, if they enter the system, it will reduce their profit margin,” said Beladenta when met on the sidelines of the action.

She stated that the plan to add layers would not solve the problem of unofficial cigarette circulation at all. The coalition is instead worried that excise revenue will fall because the additional layers risk pushing producers into cheaper cigarette tariffs.

So far, there are eight excise category structures in effect in Indonesia for the categories of machine-made cigarettes and hand-rolled kretek cigarettes (SKT). IYCTC Executive Director Manik Margana Mahendra assessed that Indonesia’s cigarette excise layers are the most complex in the world. He is actually demanding that these tariff layers be simplified.

According to Manik, the plan to add cigarette excise layers is ironic, considering the government is currently tightening its budget. If layers are added and cheap cigarettes circulate freely, the health budget could actually swell because consumers gain easy access.

Meanwhile, RUKKI Chairperson Mouhamad Bigwanto asserted that excise is a control instrument. “The philosophy of excise is consumption control, not state revenue. And excise is a fine, and a fine should be as high as possible,” he said.

Previously, Finance Minister Purbaya Yudhi Sadewa had confirmed that tobacco excise tariffs would not increase until 2027. This decision, according to him, aims to create stability whilst strengthening supervision and eradicating the circulation of illegal cigarettes, which have been disrupting the business climate and eroding state revenue.

“I am keeping it constant, no increase and no decrease. I want economic stability first,” said Purbaya in Jakarta on Wednesday, 20 May 2025, as quoted from Antara.