Gus Lilur: Adding a Layer of Tobacco Excise Tax Will Save the People's Industry
Jakarta – Criticism of the Ministry of Finance’s plan to add a new layer to the structure of the Tobacco Excise Tax (CHT) tariff is deemed to oversimplify the issue and ignore the structural reality of Indonesia’s tobacco industry.
Gus Lilur, Founder and Owner of Rokok Bintang Sembilan (HRM Khalilur R Abdullah Sahlawiy), views the addition of a layer not as a backward step, but as a fiscal transition instrument to restructure the market that has been distorted and characterised by structural business inequality.
According to him, the ongoing debate has been too focused on retail prices and consumption, without examining the dimensions of industrial structure and state revenue. Indonesia has a market character different from the Philippines or other countries often used as reference points.
“Our industrial structure is not singular. There are large companies, medium-scale enterprises, and thousands of small-scale labour-intensive businesses. If the tariff structure is flattened uniformly without a transition mechanism, what dies first is not consumption, but small industry. That is an economic fact,” Gus Lilur said in a written statement on Saturday, 28 February 2026.
Data from the Ministry of Finance in recent years shows that CHT revenue remains one of the backbone sources of the state budget, ranging at over 200 trillion rupiah annually. However, he noted that illegal cigarette circulation continues to be a problem. Several reports mention a rising trend in illegal cigarette circulation in recent years, particularly in the low-price segment.
According to business circles, this phenomenon cannot be separated from a tariff structure that is too steep, creating a large gap between legal and illegal products.
“When the price gap is too high, the market will seek loopholes. The addition of a layer is precisely to narrow those gaps so that small businesses can enter the legal system and the state does not lose revenue,” he said.
He rejected the narrative that an additional layer automatically means flooding the market with cheap cigarettes. According to him, consumption control remains within the domain of aggregate tariff policy and distribution supervision, not solely on the number of layers.
“A layer is a classification instrument, not a discount. What determines whether something is cheap or expensive is the tariff, not the number of layers. Don’t reverse the logic,” he stressed.