Govt seeks more income from cigarettes

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.