Cigarette Excise Tax Hike Next Year, Here's the Trend of its Acceptance until September 2022

The Indonesian government has decided to increase the excise tax on tobacco products (CHT) by 10% in 2023 and 2024.

Finance Minister Sri Mulyani stated that the CHT rate increase for machine-made clove cigarettes (SKM), machine-made white cigarettes (SPM), and hand-rolled clove cigarettes (SKP) will vary according to their respective categories.

“The average (increase in cigarette excise tax) is 10%, with SKM I and II seeing an average increase of between 11.5% and 11.75%, SPM I and SPM II increasing by 12% to 11%, while SKP I, II, and III will increase by 5%,” said Sri Mulyani, as quoted from the Presidential Secretariat website on Thursday (3/11).

The tariff increase applies not only to CHT but also to electronic cigarettes and other processed tobacco products (HPTL). For electronic cigarettes, Sri Mulyani said the excise tax increase will continue annually for the next five years.

So, what is the trend of tobacco excise revenue this year?

According to the Ministry of Finance's report, the realization of tobacco excise revenue (CHT) has grown rapidly up to the ninth month of this year.

Tobacco excise revenue from January to September 2022 reached Rp153.05 trillion. “The growth of (CHT) revenue remains positive at 19.27% (year-on-year/yoy),” said Sri Mulyani at the APBN KiTa conference some time ago (21/10).

The increase in CHT revenue has also increased significantly in the last three years. In January-September 2019, the realization of CHT revenue was only Rp102.7 trillion.

Then, it increased by 8.53% (yoy) in January-September 2020 to Rp111.46 trillion and increased by 15.14% (yoy) to Rp128.33 trillion in January-September 2021.