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Hiking tobacco excise alone won’t reduce smoking: Finance Ministry

The Finance Ministry doubts that the increase in tobacco excise can reduce the prevalence of smoking in the country, arguing that the regulation needs to be combined with non-fiscal policy to make it more effective.

Suahasil Nazara, the ministry’s fiscal policy office (BKF) head, said besides gradually increasing excise tax, educating people about the negative impact of smoking and preventing youths from purchasing tobacco products also were equally important.

“I don’t believe that increasing excise tax will reduce the prevalence of smoking. We need to use a combination of fiscal and non-fiscal policies,” he said in a discussion on cigarettes at Hotel Borobudur in Central Jakarta.

In eight years, the number of tobacco factories had gone down from 4,669 in 2007 to 714 in 2015, which reflected the recent decline in cigarette production. The fact implied that production had decreased in line with market forces, he said.

The government’s argument was slammed by Hasbullah Thabrany, a professor of public health at the University of Indonesia’s School of Public Health, who said the reason behind the declining number of tobacco companies was because many small companies—mostly hand-rolled cigarettes—were unable to compete with big firms.

The Finance Ministry announced in October that it had issued a regulation to increase excise taxes by an average of 10.54 percent next year for several types of cigarettes. The price increase was lower than the target set by the government this year of 11.33 percent. (win/evi)

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