The government plans to increase tobacco excise duties in 2018, with an announcement expected next month. This policy aims to control domestic cigarette production and increase excise revenue. The increase in tobacco excise duties is estimated at around 8.9 percent, assuming 5.4 percent economic growth and 3.5 percent inflation in 2018.
The 2018 State Budget (RAPBN) projects a 1.47 percent increase in excise revenue to Rp 155.4 trillion, compared to Rp 153.16 trillion in the 2017 Revised State Budget (APBNP). Meanwhile, government revenue from cigarette excise duties in 2018 is targeted at Rp 148.23 trillion, a slight increase of 0.51 percent from the 2017 APBNP. Tobacco excise duties are projected to contribute 95.39 percent of national excise revenue next year and 9.21 percent of total national tax revenue.
In 2016, Rp 2.85 trillion in tobacco excise duty funds were transferred to regional governments as revenue sharing. In the 2017 APBNP, this transfer was targeted at Rp 2.95 trillion and is projected to increase to Rp 2.96 trillion in 2018.
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