‘Raising tobacco tax improves national health, economic benefits
Starting Jan. 1, 2015, the government will officially raise tobacco excise from 56 percent to 65 percent as part of moves to discourage smoking.
Indonesia continually counts as among countries with the highest smoking rates worldwide, with over 62 million or one-fourth of its population being smokers.
This number, combined with low levels of income and education, has resulted in wasted household income in six of every 10 families. Worse, smoking cuts the life expectancy of smokers by 10 years on average.
A reduction in the number of smokers would avert tobacco-related illness expenses of up to Rp 11 trillion (US$880 million) per year. The risk of heart disease would halve only one year after smokers quit, while the risk for stroke would decline to normal level after five to 15 years.
Further, the averted cigarette consumption would translate into an 11.9-percent increase in expendable household income for health plans, education and nutrition.
Essentially, people consume fewer cigarettes when they are more expensive. The World Health Organization has recommended a cigarette excise of 70 percent, which would raise prices to Rp 18,000 per pack.
However, according to Abdillah Ahsan, senior researcher and vice-director at Demographic Institute of the University of Indonesia (UI) in Jakarta, the ideal price to really discourage cigarette consumption is Rp 50,000 per pack, although still far lower than prices in Singapore or Australia.