Indonesia’s Finance Minister Questions โHigh tobacco Excise Taxes, Cites Workforce Concerns
Jakarta, Indonesia – Indonesia’s Minister of Finance, Purbayaโ yudhi Sadewa, โhas expressed surprise andโค concern โover the consistently high โexcise taxesโข leviedโค on โฃtobacco products, questioning whether the policy is ultimately โbeneficial for the โnation’s economy. In a candid discussion with his staff, Minister Sadewa revealed his shock at the cumulativeโ 57% increaseโฃ in excise tariffs, and raised doubts about its โขimpactโ on state revenue.
The Minister’s concerns center around aโ seeming contradiction: while the intention ofโ the highโ taxes is to curb smoking, data suggests thatโ increasing the tariffs decreases state income. “I asked, how about cigarette excise? Now what โis the average? โ57%, veryโ high,”โฃ Sadewa โstated, adding that lowering the tariffs, hypothetically, could increase revenue.”Ifโ you go โคdown, the more income. Why is it raised โif so?”
However, Sadewa acknowledged theโข government’s broader policy goal of reducingโฃ cigarette consumption. He understands โthe logic of shrinking the industry toโฃ discourage smoking, but โขvoiced a critical oversight โin the currentโ approach.
The Humanโ Cost of Policy
The core of Sadewa’s concern lies with the โpotential impact on the Indonesian workforce. He โsharply questioned the โคlackโ of accompanying programs to mitigate job losses within the tobacco industry.
“Have we made aโข program to mitigate the workforce โคthat becomesโ unemployed? What is the program from the government?โฃ Nothing,” he stated, criticizing the policy as potentially harmful to those who rely on the industry for their โlivelihoods. “If so, we โwill see later. as long as weโ can’t have a program that can absorb unemployed labor, the industryโฃ should not be killed, it only causesโ challenging people, but it โฃmust be limited to the smoking.”
Revenue Trends & Production Decline
Data โfrom the Directorate General of Customs andโข Excise supports the Minister’s observations. while excise tax revenueโ initially rose with tariff increases – reaching Rpโ 218.3 trillion in 2022 with a 12% tax hike – production volume has steadily declined.
* 2022: Production: โค323.9 billion stems,Revenue: โRp 218.3 trillion (12% excise โincrease)
* 2023: Production: 318.1 billionโค stems, Revenue: Rp 213.5 โขtrillion (10% excise increase)
* โฃ 2024: Production: 317.4 billion cigarettes, Revenue: Rp 216.9 trillion (10% excise increase)
Despiteโ theโ continued โคtariff increasesโฃ in 2023 โฃand 2024, production continued to fall, with โrevenue only โฃmarginally increasing in 2024. โข Notably, 2025 saw no โฃincrease in tariffs.
A Call for Balanced Policy
Ministerโข Sadewa’s commentsโฃ signal a potential shift in the conversation โsurrounding tobacco excise policy in Indonesia.โข While acknowledging theโ importance of public health โฃinitiatives, he emphasizes the need forโ a more holisticโ approach that considersโค the economic consequences and provides support โfor affected workers. The โคMinister’s remarks suggest a future review of the current policy, potentially seeking a โคbalance between curbing consumption andโฃ protecting livelihoods.
Keywords: Indonesia, Tobacco Excise, Cigarette tax, Purbaya Yudhiโ Sadewa, Finance Minister, Economy, Workforce, Revenue, Consumption, Public โขHealth, Policy, Directorate General of Customs and โคExcise.