Planned tobacco tax ineffective: Official

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)