Govt seeks more income from cigarettes

Tony Hotland, The Jakarta Post, Jakarta

The government wants tobacco companies to increase production to 200 billion cigarettes this year to help it meet its excise revenue target for 2004.

"The minister of finance has stated that there will be no increase in excise rates or the retail price of tobacco this year. So, we're expecting tobacco companies to raise their output," Director General of Customs and Excise Eddy Abdurrahman was quoted by detik.com as saying on Wednesday.

The government has set a Rp 27.7 trillion (US$3.25 billion) excise revenue target this year, up from an estimated Rp 26.3 trillion in 2003. In total, the government expects to collect Rp 260 trillion in excise and tax revenue this year.

Eddy added that the decision not to raise excise rates was to enable the cigarette companies to restructure, following the recent slump in cigarette sales.

"We hope that the economic condition in 2004 will get better, so it will improve the public's purchasing power, and eventually affect the production itself," he said.

Sales dropped to 186 billion cigarettes in 2003, from 204 billion in 2002. The suggested production increase would require a 9.3 percent rise in sales over 2003.

The pressure to boost the production of cigarettes has been criticized by several non-governmental organizations, who fear that the move will encourage more new smokers.

Chairman of the Indonesian Health Consumer Empowerment Foundation (YPKKI), Marius Widjajarta, sees the move as "legalizing massive public death".

"It shows that the government doesn't care about the health of its citizens, but only cares about money. Our leaders must think of the big picture here," he told The Jakarta Post.

The tobacco industry contributes some 90 percent of the government's excise revenue, with the liquor industry contributing the remainder.