Purbaya: No Increase in Cigarette Excise Duty in 2027

Finance Minister Purbaya Yudhi Sadewa has confirmed that the cigarette excise tax policy will not change in 2027. “There is no (increase),” Purbaya stated in the vicinity of the State Palace in Jakarta, as quoted on Friday. According to Purbaya, the tobacco excise policy will only undergo a slight modification to its tariff layers. He explained that the change, planned since the beginning of this year, involves adding a new excise layer to serve as an instrument for illegal cigarette producers transitioning to legal status. Purbaya noted that the addition of this new excise layer will first be discussed with Commission XI of the House of Representatives (DPR), after deliberations on the 2027 State Budget bill are completed. “There will be one new layer. We must report to the DPR, and it will be done after this law meeting is finished,” he stressed. Prior to Purbaya’s appointment as finance minister in September 2025, the government had raised tobacco excise rates almost every year by a weighted average of 10-12 percent. Over the last 15 years, rates were not increased only three times: in 2014, 2019, and 2025. In 2014, the excise was not raised due to new regulations under Law No. 28 of 2009 on Regional Taxes and Levies, which designated 2014 as a transition period for implementing regional cigarette taxes. In 2019, the excise was frozen due to an economic slowdown and weakened purchasing power, though many viewed the decision as politically biased given the presidential election that year. In 2025, the government did not raise the tobacco excise rate but made adjustments to the retail selling price, a policy that has continued into 2026. Industry players have proposed a three-year moratorium on excise and retail price increases, citing that public purchasing power has not yet fully recovered.