Planned tobacco tax ineffective: Official

JAKARTA (JP): The government's plan to base a cigarette excise scheme on nicotine and tar content in cigarettes can not be implemented in the near future because it would be difficult to control, a senior official at the Ministry of Finance said on Friday.

Director General of Customs and Excise Duty Permana Agung Dradjatun said it would be very difficult for them to control the implementation of the ruling because it did not have the technology to measure nicotine and tar content in cigarette products.

"There is no country in this world which has implemented such a scheme because it will be very hard for the officials to trace any violations in the field," he said.

Permana said such an excise scheme would only kill local cigarette makers, instead of encouraging cigarette producers to produce healthier cigarettes.

"Such a ruling, if it is implemented, would kill clove-blended cigarette producers and would create massive lay-offs. In the end, the government will not be able to gain the Rp 10.8 trillion (US$1.44 billion) from cigarette excises targeted for the 1999/2000 fiscal year," he said.

The cigarette excise is issued by the Ministry of Finance based on recommendations from the Ministry of Industry and Trade.

Minister of Industry and Trade Rahardi Ramelan said on Friday the government might introduce a new cigarette excise scheme to replace the controversial tax ruling introduced in April.

The government is preparing a new scheme which would take into account nicotine and tar content in cigarette products.

Rahardi said the planned excise scheme was aimed to encourage the local cigarette industry to produce healthier cigarette products.

The existing tax ruling, which sets minimum retail cigarette prices, is strongly protested by non-clove (regular) cigarette producers, who under the new tax scheme, have to raise the prices of cigarettes.

The minister also denied rumors that the plan to review the existing tax was to satisfy regular (non-clove) cigarette makers.

However, Permana said that the plan contained "political purpose" because it only benefits giant international cigarette makers.

The Friends of Tobacco Foundation said the new tax, would harm clove-blended cigarette makers, mostly small and medium companies which do not have the technology to measure the content of tar and nicotine in products.

Foundation chairman Ermil Tabrani said it would also kill local tobacco farmers because tobacco planted by farmers contained higher nicotine levels.

Ermil said such a ruling would benefit only the machine-rolled cigarette makers, most of which are giant international cigarette companies, because the "white cigarette" is not composed from cloves which contains tar.

Clove-blended cigarettes have a higher nicotine content than regular cigarettes, he said.

Indonesians smoke 202 billion cigarettes per year, almost 90 percent of which are clove cigarettes.(gis)