Indonesian gov’t urged to prioritize health through effective tobacco taxation

Jakarta, 23 February 2016: Reducing tobacco use through effective tobacco taxation is critical to reducing poverty and achieving Sustainable Development Goals (SDGs).

“Tobacco use obstructs development and worsens poverty, yet tobacco consumption is increasing in Indonesia and has reached alarming proportions. Two out of every three Indonesian men are smokers. According to national surveys, smoking prevalence among Indonesian men rose from 53.4% in 1995 to 64.9% in 2013, driven by cheap and affordable cigarettes, the booming tobacco business, and industry interference in tobacco control policy which leads to conflicting government agendas,” said Ms. Sophahan Ratanachena, Tobacco Tax Program Manager of the Southeast Asia Tobacco Control Alliance (SEATCA). 

Indonesian smokers generate an estimated annual profit of US$ 35.1billion for only a handful of large tobacco companies, both foreign and domestic; however this business leaves behind a trail of disease and death inflicted upon society, affecting the poorest of the poor the most. Health care costs to treat tobacco-related diseases have been estimated to be 650% higher than the excise revenues generated from tobacco products.

“Reducing tobacco use is critical for Indonesia to strengthen its commitment to implementing the SDGs vigorously; yet Indonesia has a complicated and inefficient tobacco tax system that keeps cigarettes affordable; even value-added tax (VAT) on cigarettes is lower than for alcohol products. Effective and efficient taxation that makes tobacco products less affordable over time is an important and the most effective means to reduce tobacco consumption. It also provides a significant revenue stream to fund development priorities like healthcare and education. It’s a win-win for public health and to further countries’ sustainable development objectives,” she added.

“Experience from many countries shows that high tobacco taxes help to increase government revenues while simultaneously reducing tobacco use by encouraging smokers to quit and discouraging others, especially children, from picking up the habit. In fact, young people and poor people, who have less disposable incomes and are more price-sensitive will benefit the most, making tobacco taxes especially effective in countries like Indonesia where tobacco use is rising fast. Ultimately, it helps to decrease the socio-economic burden of tobacco use and NCDs,” said Dr. Ulysses Dorotheo, SEATCA’s FCTC Program Director.

Price and tax measures are a key component of the global tobacco control treaty, the WHO Framework Convention on Tobacco Control (WHO FCTC), which 180 countries already ratified and are parties to. Indonesia is the only Asian country that has not ratified the WHO FCTC.


Wendell C Balderas, Media and Communications Manager – SEATCA

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