Regencies demand cigarette excise

Regencies demand cigarette excise

Rendi A. Witular, The Jakarta Post, Jakarta

The country's main cigarette-producing regencies sought
support on Monday from the House of Representatives for their
proposal on the distribution of cigarette taxes.

The regencies announced they direly needed some of the revenue
generated by the tax, because, unlike other regencies, they
lacked natural resources as alternative sources of income.

The regencies demanded 10 percent of cigarette taxes.

"We have no natural resources at all. The only source of
income for us is from cigarette factories," Kudus Regent Munadjat
said, during a meeting with the House of Representatives
Commission IX on financial and development planning affairs.

Kudus is home to one of the country's largest cigarette
producers, PT Djarum Kudus, which, according to Munadjat, pays Rp
10 billion a day in tax to the central government.

Also present at the meeting was the regent of Kediri, which is
home to PT Gudang Garam, and the vice mayor of Surabaya, which is
home to PT HM Sampoerna. The three areas are located in East Java
province.

Following the implementation of the autonomy law by the
government last year, the regions have been seeking ways to
explore additional sources of income.

Intergovernmental Fiscal Balance Law No. 25/1999 only rules on
the distribution between the regional and central governments of
earnings from natural resources, such as oil, gas, mineral
resources, fish and forests.

This has disappointed many regencies that lack natural
resources.

In response, legislators said they would discuss the issue
with Minister of Finance Boediono.

Boediono, who was first scheduled to participate in the
meeting, failed to appear. He was represented by the director
general of tax and excise, Permana Agung, who claimed to have no
right to decide on the issue.

Under the state budget, the government expects to collect Rp
22.35 trillion (US$2.4 billion) in excise, including Rp 21.85
trillion from cigarette taxes.

As of the end of June, only Rp 9 trillion had been collected
from cigarette taxes, from a target of Rp 11 trillion.