Kadin East Java: Nicotine cap threatens tobacco excise revenue targets

If the 1mg limit is enforced, most of the farmers’ harvest could go unabsorbed by the industry.

The East Java Chamber of Commerce and Industry (Kadin) warns that proposed limits of 1mg nicotine and 10mg tar per cigarette could threaten the government’s target to optimise tobacco excise revenue by 2027.

Kadin East Java’s Committee on Inter-Institutional and Government Relations Chairman Syaifudin Alamsyah said the government must align tobacco control policies with revenue targets from the sector.

“This is like one hand building while the other destroys. The government wants to increase tobacco excise revenue, but is simultaneously preparing regulations that could cripple its own production machinery,” Syaifudin said in a statement received in Surabaya on Monday.

He noted that the 2027 Macroeconomic Framework and Fiscal Policy Outline (KEM-PPKF) identifies tobacco excise as a key instrument for optimising government revenue.

Syaifudin said the proposed 1mg nicotine limit would be difficult to implement given the national tobacco industry’s current state, as most local tobacco naturally contains nicotine levels above the planned threshold.

He stated around 90% of local tobacco has natural nicotine levels between 2mg and 8mg, meaning the limit could reduce industry absorption of farmers’ harvest.

“If the 1mg limit is enforced, most of the farmers’ harvest could go unabsorbed by the industry due to non-compliance with regulations,” he said.

He added that the policy’s impact would not only affect the tobacco industry but also farmers in major production areas such as East Java, Central Java, Lombok, and North Sumatra.

Syaifudin estimated the situation could trigger production declines, reduced harvest absorption, and lower excise contributions to government revenue.

He also warned that the nicotine cap could contradict the KEM-PPKF 2027’s revenue intensification strategy, which focuses on oversight, law enforcement, and closing tax evasion loopholes.

Moreover, he cautioned that restricting nicotine levels without considering domestic market conditions could increase illegal cigarette circulation.

According to him, consumers would not immediately stop smoking just because of nicotine limits on legal products.

Kadin East Java urged the government to align health policies with economic, industrial, and agricultural aspects to avoid policy contradictions.