Calling for tax increase

| May 17, 2017

Indonesia’s Health Ministry is calling for tobacco tax increases on the grounds that cigarette consumption is a health hazard that causes trillions of rupiah in losses to the state, according to a story in The Jakarta Post quoting kompas.com.

The ministry’s Research and Development Agency is said to have found that Indonesia suffers annual losses of Rp500 trillion (US$37.5 billion) from the negative impacts of smoking, an amount that represents a quarter of the state budget.

“Smoking brings negative impacts, both directly and indirectly,” the agency’s chairman, Siswanto, was reported to have said on Tuesday.

One direct impact was that many smokers suffered smoking-related illnesses and had to spend a lot of money on medical treatment: expenditure that become the responsibility of the Health Care and Social Security Agency.

One indirect impact was caused when the heads of families died prematurely due to smoking, leaving their families in poverty. “When a husband dies at the age of 50, 20 years are lost,” Siswanto said. “If we multiply that with the minimum wage, it can reach Rp500 trillion.”

Therefore, Siswanto said, his ministry was pushing for an increase in cigarette tax as part of efforts to reduce consumption.

At the same time, the additional tax funds could help increase the budget for health care programs, he said.

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Category: Breaking News, Markets, Tax

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