Civil Coalition Rejects Finance Minister Purbaya's Plan to Add Tobacco Excise Layers

The Save Our Surroundings (SOS) coalition, comprising the Center for Indonesia’s Strategic Development Initiatives (CISDI), Seknas FITRA, and Indonesia Corruption Watch (ICW), has rejected Finance Minister Purbaya Yudhi Sadewa’s plan to add layers to tobacco product excise tariffs. The three organisations assess that this policy contradicts the function of excise instruments.

FITRA researcher Gurnadi Ridwan stated that excise is used for control. Therefore, the basis for adding layers to plug leaks in the State Revenue and Expenditure Budget (APBN) is misguided. “The current APBN condition cannot be justified for increasing layers in the name of state revenue,” he said during a virtual press conference on Thursday, 30 April 2026.

Previously, Purbaya planned to draw illegal cigarette industry players into the legal system by paying excise to the state. The method involves adding a new layer to the tobacco product excise (CHT) or cigarette excise structure, previously only eight layers.

CISDI even recommends simplifying those eight layers. CISDI Health Economics Research Associate Muhammad Zulfiqar Firdaus stated that more structural space accommodates the industry in producing various cigarette variants. The abundance of variants makes it easy for consumers to switch to cheaper cigarettes (downtrading). “Creating a new layer has great potential to add to the downtrading phenomenon,” he said.

Zulfiqar also questioned the implementation plan for adding layers. Because it will create uncertainty in the legalisation process for illegal cigarette production. “Opening a new tariff layer is highly questionable whether any illegal industry will ultimately enter the legal market,” he said.

CISDI assesses this policy as politically tinged. Because it opens room for compromise with illegal cigarette industry players. This condition also contradicts the government’s efforts to reduce smoking prevalence in Indonesia.

Meanwhile, ICW views this policy as problematic because it does not address the root issue, namely weak supervision and law enforcement processes. ICW researcher Seira Tamara assesses that adding tobacco product excise layers with cheaper rates will only create new corruption loopholes.

“Instead of encouraging illegal cigarette producers to become legal, adding a new tobacco product excise layer with cheaper rates is prone to creating new corruption practices through manipulation of classification determination,” she said.

Seira added that adding excise layers poses broad risks to society. Policies like this tend to benefit a few parties, create moral hazard, and ultimately impact increased access to cheap cigarettes as well as long-term health and economic burdens.

Previously, Purbaya stated that this new policy is targeted to apply from May 2026, so the government can immediately collect state revenue from this additional instrument. “We want it to be running at the latest in May, so revenue comes to us and I can really prohibit illegal cigarettes,” he said, quoted from Antara.