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

Sarah Barber, Abdillah Ahsan

Research output: Contribution to journalArticlepeer-review

12 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)208-225
Number of pages18
JournalJournal of Public Health Policy
Volume30
Issue number2
DOIs
Publication statusPublished - 3 Aug 2009

Keywords

  • Economics
  • Excise
  • Indonesia
  • Public policy
  • Tax
  • Tobacco

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