Indonesia - may increase tobacco excise tax by 5% if the tobacco industry approves..

October 14, 2010 - With one of the highest smoking rates in the world, Indonesia plans to raise its tobacco excise tax by five percent next year to help meet state revenue targets, a senior official said on Wednesday, October 13th. (April 6, 2010 - Indonesia - government may raise cigarette tax and cut cigarette output..)

Cigarettes sell for about a dollar a packet in Indonesia, where 60 percent of men are estimated to smoke along with a "disturbing" number of children, according to the Asia Pacific Association for the Control of Tobacco (APACT).

Finance ministry official Agus Supriyanto told Dow Jones Newswires the excise level was likely to rise five percent on average next year in what is the world's fifth-largest tobacco market. Customs chief Thomas Sugijata said the increase would help meet the country's excise revenue target of 60.7 trillion rupiah (6.8 billion dollars) -- up four trillion rupiah (448 trillion dollars).

But he said the final excise rate had still to be decided and was subject to discussion with the industry, which employs millions of people in the archipelago. "We're still discussing the rate increase and will ask for input from industry, but we can promise that the increase will be moderate," Sugijata said.

For 2010 the government aimed to reduce cigarette production to 240 billion sticks from 245 billion last year.

The current excise level per cigarette ranges from 65 to 320 rupiah (0.007 to 0.035 dollars).

Analysts said the rise was unlikely to have much impact on major producers such as Gudang Garam, Sampoerna and Djarum, which benefit from customer loyalty and efficient distribution networks.

Reference: Heavy-Smoking Indonesia to Raise Tobacco Tax, Agence France-Presse (AFP), Jakarta Globe, 10/13/1020.

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