Endang Mulyani, Jakarta – A coalition of tobacco control groups has rejected the government's plan to add a new cigarette excise tax tier proposed by Finance Minister Purbaya Yudhi Sadewa, saying it would weaken tobacco control. The plan drew attention after the Finance Ministry said it is considering taxing illegal cigarettes to raise state revenue.
The coalition – comprising the Indonesian Youth Council for Tactical Changes (IYCTC), the Center for Human and Economic Development at Ahmad Dahlan Institute of Technology and Business (CHED ITB-AD), the Tobacco Control Support Center of the Indonesian Public Health Association (TCSC-IAKMI), the National Commission on Tobacco Control, the University of Indonesia's Center for Social Security Studies (PKJS UI), the Center for Indonesia's Strategic Development Initiatives (CISDI), and the University of Indonesia's Center for Islamic Economics and Business (PEBS UI) – voiced its opposition at a press conference on Friday.
Rosita Meilani Dewi, head of CHED ITB-AD, said the coalition appreciated the government's efforts to simplify the tobacco excise tariff structure but warned that further reforms should not undermine existing policy frameworks.
"We appreciate the government's efforts to simplify the tobacco excise tariff structure. However, further simplification is still needed," Rosita said.
CHED ITB-AD survey shows that even with the current eight excise tax tiers, many cigarettes are still being sold for below Rp 10,000. "If another tier is added, cheap cigarette prices will become even more widespread. A multi-layered structure will only maintain affordability, particularly among vulnerable groups such as children and low-income families," she said
She also dismissed illegal cigarettes as a pretext for adding another excise tier. "Illegal cigarettes are a criminal issue that must be addressed through law enforcement, not by undermining the existing excise structure. In fact, the circulation of illegal cigarettes has continued to rise," she added.
Ede Surya Darmawan, a public health policy expert from the University of Indonesia, said the proposed additional excise tier could make cigarettes more affordable rather than reduce consumption. He stressed the need for parliamentary oversight.
"Law No. 7/2021 on the Harmonization of Tax Regulations mandates that any addition or reduction of excise objects must be discussed with the House of Representatives and included in the state budget law," Ede said.
The coalition warned that the policy could worsen "downtrading," a trend in which smokers switch to cheaper brands instead of cutting back or quitting. They argued that introducing new excise tiers would create more low-price segments in the market, undermining efforts to curb smoking rates.
"Government revenue could also be affected as more consumers shift to cheaper products," Rosita said, adding that the measure risks weakening excise policy as a tool to reduce tobacco consumption.
Risky Kusuma Hartono of the University of Indonesia's Center for Social Security Studies described the proposal as a "toxic discount" that could widen access to cigarettes while increasing public health and economic risks, including addiction and poverty.
"Smokers who switch to cheaper cigarettes are 5.75 times more likely to struggle to quit. Lower prices can also attract non-smokers to start smoking," Risky said.
The government has said the plan aims to restructure cigarette excise tiers to address illegal cigarette circulation while maintaining state revenue. Finance Minister Purbaya Yudhi Sadewa has pledged to crack down on illegal cigarettes while offering legalization pathways for small producers, saying the policy is intended to create a fairer tobacco market and protect jobs.
The Directorate General of Customs and Excise (DJBC) at the Finance Ministry seized 249 million illegal cigarettes in January, a 53.8% increase from the same period last year.
Indonesia loses an estimated Rp 15 trillion ($940 million) annually in unpaid taxes from illegal cigarette sales, according to Industry Ministry data. Roughly 22 billion illegal sticks were sold nationwide in 2023, accounting for nearly 7 percent of the country's total output.