Jakarta, Indonesia Sentinel — Indonesia’s Directorate General of Customs and Excise (Beacukai) has announced that there will be no changes to the tobacco excise tax (CHT) rates in 2025. Askolani, the Director-General of Customs and Excise at the Ministry of Finance, emphasized that the decision aligns with discussions held during the 2025 State Budget (RAPBN) deliberations, which were approved by the House of Representatives last week.
“The government’s position is not to implement any changes to the CHT policy for 2025,” Askolani said during a press conference on the state budget at the Ministry of Finance headquarters in Jakarta on Friday, September 27, 2024.
One key factor influencing the decision is the ongoing “down trading” phenomenon in the tobacco market, where consumers are shifting toward cheaper cigarette brands. “This CHT policy for 2025 considers the down trading that occurs between premium and lower-tier cigarettes,” Askolani explained.
Despite the decision to maintain current tobacco excise tax rates, the government is exploring other alternatives for 2025. One potential policy involves adjusting cigarette retail prices at the industry level. “The government will assess alternative policies, such as price adjustments at the industrial level, over the coming months to determine the most appropriate course of action,” he added.
Proposal for an Excise Increase
Earlier, the House of Representatives’ Budget Accountability Committee (BAKN) had proposed a minimum 5% increase in tobacco excise tax rates for machine-made clove cigarettes (SKM) and machine-made white cigarettes (SPM) for the 2025–2026 period. This proposed hike is lower than the 10% increase implemented in both 2023 and 2024.
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Wahyu Sanjaya, Chairman of the BAKN, explained that the reduced rate aligns with efforts to sustain the tobacco industry. “The goal is to increase state revenues from CHT while limiting the rise in excise taxes for hand-rolled clove cigarettes (SKT) to promote job creation,” Wahyu said during a BAKN meeting on September 10.
The BAKN also recommended the government explore digital methods for controlling excise stamps to enhance oversight and reporting on stamp production. Additionally, the committee urged the government to draft a comprehensive roadmap for the tobacco industry, aimed at providing clearer policy guidance for the future of the sector.
(Raidi/Agung)
