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The tobacco excise system in Indonesia: Hindering effective tobacco control for health

Journal of Public Health Policy volume 30, pages 208–225 (2009)Cite this article

Abstract

Comprehensive tobacco control policies include high taxes. This paper describes the tobacco excise structure in Indonesia from 2007 to 2009. The design of the tobacco excise system contributes to neutralizing the effect of a tax increase on consumption. Wide gaps in tax rates allow for the availability of low-priced products, and consumers can substitute to cheaper products in response to price increases. There has been no systematic increase in the tax rates, which promotes affordable of tobacco products. Firms can reduce their prices at point of sale and absorb the tax increase instead of passing it onto consumers. Tiered tax rates by production scale allow firms to evade paying the highest tax brackets legally, thereby increasing profit margins while reducing prices at point of sale. Increases in tobacco excise rates in Indonesia may not have a large health impact under the current system of tax administration.

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Author information

Authors and Affiliations

  1. World Health Organization, 410 Dongwai Diplomatic Office Building, No. 23 Dongzhimenwai Dajie Avenue, Chaoyang District, Beijing, 100 600, China

    Sarah Barber

  2. Demographic Institute, University of Indonesia, Jakarta, Indonesia

    Abdillah Ahsan

Authors
  1. Sarah Barber
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  2. Abdillah Ahsan
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Additional information

Indonesia's complex excise tax scheme for tobacco products has many goals and the author's describe how it may make tobacco control more difficult.

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Barber, S., Ahsan, A. The tobacco excise system in Indonesia: Hindering effective tobacco control for health. J Public Health Pol 30, 208–225 (2009). https://doi.org/10.1057/jphp.2009.12

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  • DOI: https://doi.org/10.1057/jphp.2009.12

Keywords

  • tobacco
  • excise
  • tax
  • public policy
  • economics
  • Indonesia