Tobacco Taxation
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Increasing tobacco tax is a win for health and a win for the economy
The tobacco industry exploits and benefits from Indonesia’s tobacco tax system, which is one of the most complicated in the world: multiple tiers with different tax rates for different types of cigarettes. Despite increases in tax rates, cigarettes remain cheap and affordable, thus encouraging smoking among Indonesians.
Indonesia is the world’s second largest cigarette market (65 million smokers). The country’s complicated tobacco tax system allows the industry to make big profits by keeping cigarette prices low and Indonesians addicted. As a result, the government loses money, and many Indonesians die from smoking.
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Even with increases in excise tax rates, Indonesia’s multi-tier tax system does not discourage smoking. Smokers shift to lower-taxed, lower-priced brands when their usual brands are taxed and priced higher.
The Indonesian tobacco industry consistently opposes simplifying the complicated multi-tier tax structure and tax increases. If the government simplified the tax structure to two tiers and increased the tax by 25%, it could help 1.3 million smokers quit and avert 450,000 premature deaths.
Did you know that the tobacco industry uses pretend charity to whitewash the many harms it has caused to the environment and communities worldwide?
An industry that kills eight million people each year has no place in sustainable development. Governments should reject any form of charity from the tobacco industry.
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