Cigarette excise rates increase for 2023 and 2024 was announced in November 2022 (03/11). The determination of Tobacco Products Excise Rates ("Cukai Hasil Tembakau" or CHT) which is valid for two years is the first time in Indonesia's history.
Government considers a number of aspects in setting CHT. First, consumption control. The imposition of cigarette excise is intended to control consumption in accordance with the Excise Law.
The increase in cigarette rates is expected to be able to control the prevalence of cigarette consumption among children aged 10 to 18 years, which is targeted to decrease to 8.7% in the 2020-2024 National Medium Term Development Plan.
Second, government recognizes that cigarette industry has a labor aspect, and that tobacco products must be considered proportionally from an agricultural standpoint.
Aside from that, determination of tobacco excise must also take into account the handling of illegal cigarettes which will increase if there is a difference in rates and also increase from the cigarette excise side.
After rice, cigarette consumption is the second highest in poor households. In fact, this exceeds the consumption of proteins such as eggs and chicken.
"Secondly, considering that cigarette consumption is the second largest consumption of poor households, reaching 12.21% in urban poor households and 11.63% in rural communities. This is the second highest after rice, even exceeding the consumption of protein such as eggs and chicken, as well as tofu and tempeh, which are foods that are needed by the community," said Sri Mulyani.
Meanwhile, in addition to setting CHT rates, the government announced a five-year increase in excise rates for e-cigarettes and other tobacco product processing products.
"It was also decided today to raise excise on electronic cigarettes by an average of 15% for electric cigarettes and 6% for other tobacco product processing products. This is true; it will rise by 15% per year for the next five years "Sri Mulyani stated.
