Indonesia lawmakers debate
Published on June 12, 2009 6:32 AM
Since industry experts predict a significant increase in the volume of cigarettes sales as the business environment keeps growing, the lawmakers consider raising the excise cigarette tax by 10 percent.
Anwar Suprijadi, the chairman of Indonesia Customs Service Department, declared yesterday that he would attempt to persuade the government to approve the proposal to increase excise cigarette taxes to generate more revenue for the state next year.
Anwar stated that this year there would not be any tax increase since the corresponding agreement was reached between the Indonesia government and tobacco industry. However, the government plans to impose a 10 percent increase next year.
Customs Service executive also added that the increase was would contribute to a boost of the state budget. That would be especially important since the state expenditures would be a major factor for the development of the economy. He said that currently the private investments volume dropped, that is why the lawmakers want the tax increase.
Anwar said he hoped the rise in the cigarette tax would not hurt the revenues of cigarette industry or lead to employment cuts sine the authorities anticipate a growth in business environment.
Even while being hurt by the recent decrease of economic growth after the last quarter of 2008 fiscal year, tobacco companies do not face any significant problems, what was demonstrated by net revenues growth.
In accordance with the report published by PT HM Sampoerna, the country’s leading cigarette producer, sales of cigarette sales equaled 59.6 billion items from this January to March as compared to 53.5 billion items sold within the same period in the previous year.
Sampoerna experienced a 27 percent hike in net revenues within the first quarter of the current year. The net revenues made up 1.35 trillion ($128 million) in comparison with 1.05 trillion generated during the same period last year.
The major rival PT Gudang Garam as well scored significant net revenues by collecting 780.4 billion as compared to 336.1 billion.
Indonesia is home to the cheapest cigarettes in the world, while the nation’s cigarette industry attempts to make more than 245 billion cigarettes within the current year in order to exceed 237 billion produced last year.
Nevertheless, the revenues growth did not contribute to higher revenues for the Indonesia government since profits from excise taxes fell by 8 percent to 14.8 trillion in the first quarter of this year as compared to 16 trillion from last year, in conformity with government reports.
Customs Service executive said that the government has been highly concerned with the drop in the revenues they managed to collect, therefore they began considering to increase regional tax schedule.
The authorities are still debating the proposal to raise excise cigarette taxes. In case the proposal is signed into law, it would increase regional tax by 10 percent.
