Cigarette Excise Hike will Hurt People´s Economy

Sunday, 22 OCtober 2017 , 09:00:00 WIB -

Riau and Sumatera Barat Customs and Excise Office workers are seen destroying thousands alcoholic beverage, Pekanbaru, Riau, Tuesday (Sept.26). (ANTARA)

JAKARTA, GRES.NEWS – House of Representatives Commission VI member Bambang Haryo Soekartono said the government’s plan to raise cigarette excise by 10.04 percent on 1 January 2018 will only harm the people’s economy.

"The people will not benefit from the tax hike. In fact, they will be victims of the expensive cigarette. The government is panicking and needs to generate as much income as possible and will impose negative impacts on our economy in the process," Bambang said, Jakarta, Thursday (Oct.19).

He explained that the cigarette industry is a labor intensive industry, from upstream to downstream. Cigarette is made from tobacco that involves a very long industrial chain, from the factories, to the farm laborers, factory employees, cigarette street traders and stall owners that sell the product.

Therefore, raising cigarette excise will likely trim down the people’s spending power, which in turn will pressure the national economy. Micro, small and medium enterprises (MSMEs) will also bear negative impacts.

"Over twenty million MSMEs in the country sell cigarette. If cigarette excise is raised they would not be able to buy cigarette from factories. Therefore, the policy will kill these MSMEs that are actually our economic pillars," Bambang said.

The Gerindra (Great Indonesia Movement) Party politician said the ministry of finance should have considered the policy thoroughly as cigarette is the second leading foreign exchange income generator with the contribution reaching Rp150 trillion yearly.

"Hundreds of thousands of jobs will be in threat," Bambang concluded. (mag)