EVALUATION OF REVENUE ALLOCATION POLICY FOR CIGARETTE TAX

This research discusses the evaluation of cigarette tax policy especially regarding the allocation of cigarette tax
revenue. Cigarette tax is a local tax administered by the central government. Cigarette tax revenue allocation to
each provincial government is crucial. Cigarette tax revenue allocation is highly dependent on the formula for
calculating the revenue share of the cigarette tax. The greater revenue from cigarette tax allocated to the
provincial government, the greater the impact on the fiscal capacity of the provincial government. This research
was conducted by using post-positivism approach with qualitative research method through in-depth interview
and literature study. The results of this study illustrate that the implementation of the cigarettes tax revenue
allocation policy from 2014 to 2017 is considered to have been implemented quite well. There is an obstacle to
the allocation of cigarette tax revenue due to the delay in reporting the profit sharing of the cigarette tax by the
provincial government. The formula used by the central government in calculating the allocation of cigarette tax
has not been in accordance with the cigarette tax base that is based on consumption, thus causing injustice. In
the cigarette tax policy, the local government does not have the authority because the authority to collect is in the
central government, so it is necessary to transfer the authority to the local government