Purbaya Confident Illegal Cigarette Circulation Will Decrease with New Excise Layer

Finance Minister Purbaya Yudhi Sadewa is confident that the implementation of a new layer in the tobacco excise tariff structure will effectively suppress the circulation of illegal cigarettes.

According to him, the policy could draw illegal cigarette circulation into the legal ecosystem through the payment of excise at a certain rate. As such, perpetrators who continue to run illegal businesses will be dealt with firmly.

“I am confident (it will be effective in curbing illegal cigarettes). Because I have already met with the illegal cigarette traders. I told them I would give them room. Once it is finalised, they can enter the new layer. If you still mess around, I will come down hard,” said Purbaya at the DPR RI, Senayan, Jakarta, on Thursday, 27 August 2026.

To date, the government is still discussing the plan to implement the new layer with the DPR RI. The discussion will be held with Commission XI of the DPR RI after the deliberation of the 2027 State Budget Draft is completed.

“We have not yet met with the DPR on that matter, Commission XI. We will meet with Commission XI after the budget is settled,” he said.

Regarding the potential for downtrading, or a shift in consumption towards cheaper cigarettes, Purbaya said that this depends on market conditions and consumer preferences.

He noted that illegal cigarettes are actually cheaper, so the shift in consumption resulting from the excise policy needs to be viewed more broadly.

“That depends on the market; people have their own tastes. If illegal ones are even cheaper, then where is the downtrading heading? We will regulate it so that they do not compete directly, so that there remains a sufficient gap,” he said.

Previously, Purbaya had stated that the government is seeking to implement the addition of a new layer in the tobacco excise tariff structure this year. However, the policy still requires discussion and approval from the DPR RI.

“For cigarette excise, we will try to implement it this year, after I have spoken with parliament. We have not yet met, we have not had the time. After 17 August, we will meet with the DPR to confirm the tobacco excise,” said Purbaya on Friday, 14 August 2026.

It is known that customs and excise revenue in the 2027 State Budget Draft is targeted at Rp 316.6 trillion, corrected by 1.2 percent compared to the 2026 State Budget projection of Rp 320.6 trillion.