Cigarettes cheaper than candy
The intended raise in tobacco excise by 8.5% in December this year would neither increase the cigarettes price considerably nor decrease smoking rates in Indonesia, specialists have said.
Abdillah Ahsan, a specialist with the University of Indonesia demographic center, said on December 14 that the number of smokers in Indonesia would keep rising as a result of the very low cigarette price.
The low price installed on cigarettes both appeals to people to start smoking and guarantees the return business of addicted patrons.
“There should be high taxes in order to cigarette use reduces,” he told.
Abdillah stated that the government should enforce significant taxes especially on two market-dominant cigarette products, the machine-made clove cigarettes and the hand-made kretek.
The Finance Ministry announced that the raise in cigarette excise by 8.5% will come into force later in December.
“Even with the high tax, people can still afford to pay for cigarettes; therefore, it is estimated that this tax hike will have little effect on cigarette use,” said Abdillah.
The authorities expects Rp 88 trillion (US$9.14 billion) from cigarette tax income in 2012. The sale of cigarettes is estimated to achieve 268 billion items this year. This surpasses the sales goals set by the tobacco industry’s road map.
Cigarettes in Indonesia have tax rates varying from Rp 80 to Rp 380 per cigarette stick. The tax rate for the hand-made kretek from category 3 appears at 38% per cigarette.
The maximum cigarette product tax rate in Indonesia is at only 56% per cigarette, regardless of the World Health Organization (WHO) suggesting that the levy imposed on cigarette products should stay at least 70% of the sale price of each cigarette.
Citing a survey on 2,000 smokers led by the LDUI, Abdillah said the average price of a cigarette pack people would consider as inexpensive was less than Rp 25,000. Presently, the price for a pack of cigarettes is between Rp 5,000 and Rp 15,000. People can even purchase a singular cigarette for only Rp 250 — cheaper than candy.
To protect people from the health risks related to smoking, the government is presently implementing a regulation on the control of tobacco products that would control smoking practices. It would include three main concerns — the addition of health warnings on product packaging, tobacco advertising regulation and the designation of smoke-free zones — even so, the signing of the government regulation (PP) continues to be unclear.
A lately published Global Adult Tobacco Survey revealed that Indonesia is one of the nations with the highest prevalence of smokers. Around 61.4 million people in Indonesia at the age of 15 and above are regular smokers.