Indonesia tobacco tax revenue declines as vaping rises

The tobacco tax revenue in Kudus, Central Java, Indonesia, reached 25.7 trillion rupiah in the third quarter of 2023, accounting for 64.6% of the annual tax target of 39.8 trillion rupiah. Kudus officials stated that they will do their best to meet the target by the end of the year.

According to a recent report by the Indonesian National News Agency (ANTARA), the tobacco tax revenue in Kudus, Central Java, reached 25.7 trillion rupiah in the third quarter of 2023, which is 64.6% of the annual tax target of 39.8 trillion rupiah. Kudus officials stated that they will do their best to meet the target by the end of the year. 

Due to the increase in tax revenue at the end of each year, mainly due to non-fiscal stimulus measures such as deferred tobacco tax payments and increased demand for cigarette tax standards. However, Sopan admitted that there are challenges to achieving the tobacco tax revenue target, such as the decrease in tobacco consumption and the shift from hand-rolled cigarettes to machine-made cigarettes, leading to a decline in tobacco tax revenue. This is because tobacco taxes are higher than tobacco taxes. 

In addition, he pointed out that smokers switching from cigarettes to e-cigarettes will also lead to a decline in tax revenue, as e-cigarettes have lower tax rates. 

Moreover, due to the circulation of illegal tobacco, Kudus officials have begun enforcement activities in their jurisdiction. These efforts will also support the increase in legal tobacco tax revenue, as the share of illegal tobacco can be utilized by legal tobacco.