Indonesia to Expand Tobacco Tax Tiers This Year

8 hours ago 5

Customs and Excise officers present confiscated illegal cigarettes during a press conference at the Customs and Excise Headquarters in Jakarta, May 9, 2026. The Jakarta and Banten regional offices seized 8.94 million unexcised cigarettes, preventing an estimated Rp8.66 billion in state losses. TEMPO/Tony Hartawan

TEMPO.CO, Jakarta - Finance Minister Purbaya Yudhi Sadewa stated that the government's plan to add tiers to the tobacco excise tax (CHT) structure remains under discussion with the House of Representatives. However, he assured that the implementation of the extra tax tiers would take effect this year.

He could not yet confirm when the next meeting with lawmakers to discuss the implementation will take place. Both the government and the DPR, he said, are still focusing on deliberations surrounding the State Budget bill and other policies.

Once those discussions wrap up, Purbaya plans to reconvene with the DPR to ensure the expansion of tax tiers is executed promptly. "But it will be implemented this year," he said during a State Budget press conference at the Ministry of Finance office in Jakarta on Tuesday, July 21, 2026.

As previously reported, the government intended to introduce the additional tax tiers to curb the circulation of illegal cigarettes and boost state revenues. This plan has drawn opposition from a civil society coalition comprising the Center for Indonesia's Strategic Development Initiatives (CISDI), the Indonesia Youth Council for Tactical Changes (IYCTC), and the Indonesian Health Policy Space (RUKKI).

Beladenta Amalia, Tobacco Control Lead at CISDI, affirmed that the plan offers no guarantee that illicit cigarettes will vanish from circulation. "We are certain that illicit cigarettes will persist. Additional tiers will not ensure that illegal cigarettes voluntarily enter the existing system because entering the system would reduce their profit margins," Beladenta said back in June.

At present, Indonesia maintains eight tax group tiers for machine-made and hand-rolled kretek cigarettes. Manik Margana Mahendra, Executive Director of IYCTC, considered Indonesia's tobacco tax structure to be among the most complex in the world. He demanded that these tax tiers be simplified instead.

According to Manik, the plan to expand cigarette tax tiers is ironic given that the government is currently trying to cut expenses. If additional tiers are introduced and cheap cigarettes circulate freely, healthcare expenses could swell as consumers can easily access them.

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