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PostHeaderIcon Indonesia to hike cigarette excise, cut production

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Indonesia Leader SmokingJAKARTA, April 1 (Reuters) - Indonesia plans to raise the cigarette excise tax, a senior industry ministry official said on Thursday, to offset lower production and further discourage smoking in the world's fifth-largest tobacco market. The tobacco industry plays an important role in Southeast Asia's biggest economy, as it provides millions of jobs while excise taxes on cigarettes account for about 10 percent of government revenue.

The big cigarette companies, including PT Hanjaya Mandala Sampoerna have traditionally been regarded by investors as a play on domestic consumption.

Indonesia set a target of 57 trillion rupiah ($6.27 billion) for revenue from cigarette excise in 2010, up from 54 trillion rupiah in 2009, reflecting the increase in excise, said Benny Wahyudi, director general for Agriculture and Chemical Industries at the Industry Ministry.

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Tobacco Facts

Q. What is the connection between tobacco use and poverty?

A. The net economic effect of tobacco is to decrease an economy's productive capacity through death, increased poverty and higher health care costs. The tobacco epidemic makes global health inequalities worse. In most countries, tobacco use is higher among the poor than the rich and the poor suffer more from the consequences of tobacco-related diseases, creating economic hardship and perpetuating the cycle of poverty and illness. The early death of the primary wage earner is especially catastrophic for poor families and communities. In addition, money spent on tobacco means money not spent on basic necessities such as food, shelter, education and health care. In some developing countries, the lowest income group spend more than 10% of their household income on tobacco.

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