Customs DG: Study on new excise layer to curb illegal cigarettes still underway

Director General of Customs and Excise Djaka Budi Utama has said his agency is still reviewing a plan to add a new layer to the Tobacco Products Excise Tariff (CHT), which aims to curb the circulation of illegal cigarettes while maintaining industry stability.

“Regarding the new excise band that will be initiated by the Finance Minister, as of today we are still conducting a review of the possibility of a new layer on cigarettes or excise bands,” Djaka said at a press conference in Jakarta on Tuesday.

He said Customs, as the executor of policy, is currently waiting for a decision from Finance Minister Purbaya Yudhi Sadewa.

“We are waiting for the Minister’s decision on this matter. Because Customs is the executor, whatever is decided or whatever policy is made by the Ministry of Finance, we are ready to implement it,” he said.

It was previously reported that Finance Minister Purbaya Yudhi Sadewa has completed a proposal to add a new cigarette excise layer and will soon bring it to the House of Representatives (DPR).

In the proposal, Purbaya wants to encourage illegal cigarette distributors to enter the legal system by paying a certain excise duty.

For those who do not wish to switch to the legal system, Purbaya has assured that firm action will be taken by shutting down their illegal business operations.

“Later we will give them the opportunity to play in the legal market. If they don’t want to, we will shut them down,” he stressed in Jakarta last Friday (10/4).

Regarding revenue projections from the legalisation of illegal cigarettes, Purbaya said he was reluctant to provide a rough projection and would give a more precise estimate later once the regulation has been in effect for about two months.

“If it is truly as large as people claim, the contribution would be enormous. But we will see how it goes. I don’t want to guess before we see how it performs after a month or two,” the Finance Minister said.