Govt won't hike duty on cigarettes

The Directorate General of Customs and Excise said on Wednesday that it would not increase the excise duty on cigarettes and other products despite the government's decision to revise the excise revenue target upward for this year.

The government has decided to raise its excise revenue target for 2004 by 2.2 percent to Rp 28.3 trillion (US$3.18 billion) from Rp 27.6 trillion as initially planned in a bid to boost revenue to help cover higher fuel subsidy spending resulting from soaring oil prices. The government submitted the 2004 budget revision bill to the House of Representatives on Tuesday for deliberation.

Director General of Customs and Excise Eddy Abdurrachman said that his office would keep the duty on cigarettes, which accounts for about 95 percent of total excise revenue, at the current level.

"We have no intention of increasing the duty. A stable level of duty has been shown to create certainty in the cigarette industry, which can in turn spur cigarette output," Eddy said.

He said that his office expected cigarette production to reach some 200 billion cigarettes this year, higher than the initial target of 190 billion cigarettes.

"If production reaches 200 billion, it will be enough to provide the additional revenue."

In 2003, cigarette output stood at around 184 billion, lower than the 204 billion posted the previous year.

As of July, excise revenue stood at Rp 15.49 trillion, 13.33 percent higher than in the same period last year, when the figure was about Rp 13.207 trillion. -- JP