CISDI Says RI Excise Hike Does Not Make Cigarettes Expensive
JAKARTA, KOMPAS.com - Research by the Center for Indonesia’s Strategic Development Initiatives (CISDI) indicates that the excise tax increases from 2010 to 2024 have not made cigarettes sufficiently expensive for the public.
CISDI researcher I Dewa Gede Karma Wisana stated that the rise in Tobacco Excise Duty (CHT) has not been able to suppress cigarette consumption in the country.
“In terms of price magnitude, cigarettes do appear to be gradually increasing. However, when compared to wage and income growth, those prices are actually still very cheap,” said Dewa in his official statement on Thursday (16/4/2026).
The research was conducted with Johns Hopkins University (JHU) using the Relative Income Price (RIP) indicator.
The results showed that CISDI found the public’s purchasing power has not changed over the past decade despite the government’s continuous increases in cigarette excise taxes.
The research revealed that the RIP for cigarettes in Indonesia has remained at 3 percent, meaning Indonesians only spend 3 percent of their income per year to buy 100 sticks of cigarettes.
According to CISDI, cigarettes remain affordable for Indonesians because the CHT increases have failed to exceed purchasing power growth.
“Cigarettes in Indonesia have never truly become ‘expensive’ because their price increases have always been offset by public purchasing power growth,” Dewa explained.
In the same statement, CISDI Health Economics Research Associate Zulfiqar Firdaus assessed that the excise rates for Hand-Rolled Kretek Cigarettes (SKT) make tobacco consumption control ineffective.
As a result, cigarettes in Indonesia remain affordable and relatively cheap over the past ten years.
However, cigarette price increases have been proven to reduce consumption because the public is sensitive to cigarette price changes.
“By reducing cigarette affordability by just 10 percent, cigarette consumption can decrease by up to 7.7 percent,” Zulfiqar said.
“This proves that comprehensive excise policies will actually protect the public from long-term economic burdens and health risks,” he added.