New Cigarette Excise Layer Criticised, Seen as Potential "Time Bomb" for Finance Minister Purbaya

JAKARTA, KOMPAS.com - The government’s proposal to add a new layer to the cigarette excise tax (CHT) structure has drawn criticism from various civil society groups. This policy, seen as rolling out the red carpet for illegal cigarette producers, is considered contradictory to the Finance Ministry’s (Kemenkeu) roadmap, which has so far been directed towards simplifying the tariff structure. The legalisation of illegal cigarettes is also said to potentially set a bad precedent for Finance Minister Purbaya Yudhi Sadewa in the future, especially if there is a change in regime and accusations of criminalising public policy arise. “This policy is like a double-edged sword. It seems to want to accommodate state revenue or employment absorption, but it could become a boomerang in the future,” said Gurnadi in a press statement on Sunday (10/5/2026). According to him, in the context of Indonesia, which has many precedents of criminalisation against former public officials for policies taken during their tenure, steps not based on strong studies risk opening up legal issues later on. He warned that policies taken hastily, especially with narratives of short-term fiscal needs, could become an “expensive shortcut” in terms of social and political costs. He also highlighted indications that the policy seems to have been “targeted” for quick release without adequate participatory processes. In fact, the small and medium industry community itself is not unanimous in responding to this proposal, especially from labour-intensive sectors. “If the policy is made to seem rushed, with minimal transparency, and does not accommodate the voices of the public and small business actors, then this will disappoint the public and strengthen suspicions of uneven power relations,” said Gurnadi. Similar criticism came from Zulfikar Firdaus from the Center for Indonesia’s Strategic Development Initiatives (CISDI). Based on his institution’s study findings, the illegal cigarettes circulating so far are mostly produced using machines, not hand-rolled. This means the argument that adding a layer can protect labour-intensive sectors is not entirely accurate. “What could happen instead is the opposite. This new layer has the potential to be exploited by large companies to produce cheap cigarettes and increasingly dominate the market, thus pressuring small industries,” said Zulfikar.