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| Handover of souvenirs by FEB UMM to the East Java Chamber of Commerce and Industry (KADIN) (Photo: Special). |
In early January, The President of the Republic of Indonesia, Joko Widodo, set a 10 per cent increase in the cigarette tax. It makes it harder for cigarette manufacturers to raise prices or reduce production costs.
With this issue in the news, the Faculty of Economics and Business (FEB) of the University of Muhammadiyah Malang (UMM) collaborated with Kamar Dagang dan Industri Jawa Timur (KADIN) (trans: the East Java Chamber of Commerce and Industry) to organize a national seminar titled cakap cukai and a book review entitled Kaki Diikat, Leher Dijerat DBH Cukai Rokok authored by Sunaryo as the Head of Kediri Tax and Excise Office.
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During the event, which was held on January 4th, 2024, Adik Dwi Putranto, S.H., Chairman of KADIN East Java Region, was present. According to him, the increase in excise duty rates is because the government wants to control the rate of cigarette consumption. Currently, cigarette consumption in Indonesia has also reached children, which is very bad for their health, both now and in the future.
However, behind this issue, the tobacco and cigarette industry is one of the most significant contributors to state revenue funds compared to the agricultural sector. In October 2023, the cigarette and tobacco industry generated around 160 trillion rupiah, which then went into state funds.
Meanwhile, Nirwala Dwi Heryanto, the Director of Communication and Guidance for Customs Service Users, also briefly explained. According to him, the increase in excise duty rates directly impacts cigarette producers throughout Indonesia. It even caused a new problem in the form of increased sales of illegal cigarettes.
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Furthermore, he said that the sales of illegal cigarettes in 2023 had increased to 6.9% from the previous 5.5%. Illegal cigarettes are cigarettes that are not registered and do not have an official excise tax band. The ribbon or label provided by customs indicates that the product has been subject to excise tariffs and is legal for trade.
"The attempt we have made to eradicate illegal cigarettes is through the operation of the cigarette blitz, which has an impact on controlling illegal cigarettes," he said.
According to him, the increase in cigarette excise is not necessarily due to health reasons but also involves variables of labour sustainability, state revenue, and supervision of illegal excisable goods, for example, in the health aspect, which, as of December 31st, 2021, the increase in excise duty rates reduces cigarette production to -1.77% or to 118.15 billion cigarettes/year.
For this reason, UMM Rector Prof. Dr. Syamsul Arifin, M.Si., gave his utmost appreciation to UMM's economics and business faculty for holding an exciting seminar. Moreover, customs and excise are hotly discussed and should also be discussed with students to provide new views and insights.
"Therefore, we continue to work together with the world of work and stakeholders to produce superior generations who can solve similar problems," he ended. (tri/wil/put)
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