Local tobacco consumption
Indonesia has one of the world's highest cigarette consumption, with about 5.4 thousand cigarettes smoked per smoker in 2016. According to a survey on smoking habits conducted in Indonesia in December 2019, almost half of Indonesian smokers claimed to smoke three times a day. Since 2014, the government has been raising taxes on tobacco products to cut consumption, but that has not had a significant impact on smoking rates. However, to tide the challenges of the COVID-19 pandemic, increasing tobacco excise tax would ensure a fiscal balance providing adequate revenue for the government.
Impact on tobacco farmers
In 2019, approximately 197.4 thousand metric tons of tobacco were produced in Indonesia and preliminary figures showed the GDP from manufacture of tobacco products in Indonesia was at about 140 trillion Indonesian rupiah in that same year. In response to the further planned increase in excise tax collection by 2021, the Indonesian Tobacco Farmers Association (APTI) urged the Ministry of Finance to reject the plan. According to them, the policy of increasing taxation would only result in the decline of tobacco demand in the country thereby harming the tobacco farming community. Plus, enforcement of cigarette excise taxation will also only benefit large foreign companies at the expense of tobacco farmers in Indonesia.