Labor

Indonesia’s Finance Minister Questions ​High tobacco Excise Taxes, Cites Workforce Concerns

Jakarta, Indonesia – Indonesia’s Minister of Finance, Purbaya​ yudhi Sadewa, ‍has expressed surprise and⁤ concern ‍over the consistently high ‍excise taxes⁢ levied⁤ on ⁣tobacco products, questioning whether the policy is ultimately ‍beneficial for the ‌nation’s economy. In a candid discussion with his staff, Minister Sadewa revealed his shock at the cumulative​ 57% increase⁣ in excise tariffs, and raised doubts about its ⁢impact‌ on state revenue.

The Minister’s concerns center around a‌ seeming contradiction: while the intention of‍ the high​ taxes is to curb smoking, data suggests that​ increasing the tariffs decreases state income. “I asked, how about cigarette excise? Now what ​is the average? ​57%, very‍ high,”⁣ Sadewa ‍stated, adding that lowering the tariffs, hypothetically, could increase revenue.”If‍ you go ⁤down, the more income. Why is it raised ‍if so?”

However, Sadewa acknowledged the⁢ government’s broader policy goal of reducing⁣ cigarette consumption. He understands ‍the logic of shrinking the industry to⁣ discourage smoking, but ⁢voiced a critical oversight ‌in the current​ approach.

The Human‌ Cost of Policy

The core of Sadewa’s concern lies with the ‍potential impact on the Indonesian workforce. He ‌sharply questioned the ⁤lack‌ of accompanying programs to mitigate job losses within the tobacco industry.

“Have we made a⁢ program to mitigate the workforce ⁤that becomes‌ unemployed? What is the program from the government?⁣ Nothing,” he stated, criticizing the policy as potentially harmful to those who rely on the industry for their ‌livelihoods. “If so, we ‍will see later. as long as we​ can’t have a program that can absorb unemployed labor, the industry⁣ should not be killed, it only causes​ challenging people, but it ⁣must be limited to the smoking.”

Revenue Trends & Production Decline

Data ‍from the Directorate General of Customs and⁢ Excise supports the Minister’s observations. while excise tax revenue‌ initially rose with tariff increases – reaching Rp​ 218.3 trillion in 2022 with a 12% tax hike – production volume has steadily declined.

* 2022: Production: ⁤323.9 billion stems,Revenue: ​Rp 218.3 trillion (12% excise ​increase)
* 2023: Production: 318.1 billion⁤ stems, Revenue: Rp 213.5 ⁢trillion (10% excise increase)
* ⁣ 2024: Production: 317.4 billion cigarettes, Revenue: Rp 216.9 trillion (10% excise increase)

Despite‌ the‍ continued ⁤tariff increases⁣ in 2023 ⁣and 2024, production continued to fall, with ‍revenue only ⁣marginally increasing in 2024. ⁢ Notably, 2025 saw no ⁣increase in tariffs.

A Call for Balanced Policy

Minister⁢ Sadewa’s comments⁣ signal a potential shift in the conversation ‌surrounding tobacco excise policy in Indonesia.⁢ While acknowledging the​ importance of public health ⁣initiatives, he emphasizes the need for‍ a more holistic​ approach that considers⁤ the economic consequences and provides support ‍for affected workers. The ⁤Minister’s remarks suggest a future review of the current policy, potentially seeking a ⁤balance between curbing consumption and⁣ protecting livelihoods.

Keywords: Indonesia, Tobacco Excise, Cigarette tax, Purbaya Yudhi​ Sadewa, Finance Minister, Economy, Workforce, Revenue, Consumption, Public ⁢Health, Policy, Directorate General of Customs and ⁤Excise.