Cigarette Prices being Rised, Can Poverty Rate Rise Also?

As of today, Wednesday (1/1/2020), the price of cigarettes rose by 35 percent. Here's the details.

Cigarette Prices being Rised, Can Poverty Rate Rise Also?
Illustration of Cigarette Prices - Cigarette excise - As of today, Wednesday (1/1/2020), the price of cigarettes rose by 35 percent.

According to Managing Director of the Political Economy and Policy Studies (Peps), Anthony Budiawan said, this policy could have an impact on increasing Poverty in Indonesia.

"In my opinion this is a dilemma because when viewed from smokers the average comes from the lower middle class, where they will become poorer because they spend a high budget to buy cigarettes," he said in Jakarta, Tuesday (12/31/2019). 

Anthony said that smoking is an inverior good. That is, at any price people will buy.

Thus, added Anthony, smokers can only reduce their cigarette consumption by becoming more established financial condition. If that's the case, then the awareness also increases for healthy living and not smoking. 

The government has decided to increase the tariff for effective cigarette excise as of January 1, 2020. This increase in excise is the result of a meeting chaired by President Joko Widodo at the Presidential Palace, Jakarta, in September 2019.

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The Directorate General of Customs and Excise of the Ministry of Finance sets a tobacco tax (CHT) or excise tax rate of 23 percent. As a result, there was an increase in retail selling prices by 35 percent. 

The increase in cigarette prices is in line with government regulations to raise excise tax rates on tobacco products which will take effect on January 1, 2020.

The regulation is stated in Minister of Finance Regulation (PMK) Number 152 / PMK.010 / 2019 concerning the Second Amendment to PMK Number 136 / PMK.010 / 2017 concerning Tobacco Product Excise Tariff. 

In detail, the average CHT tariff increase in 2020 is 21.55 percent. Tariffs for Kretek Machine Clove Cigarettes rose by 23.29 percent.

Then the Machine White Cigarette rose 29.95 percent, and the Hand Clove Cigarette or Hand White Cigarette rose 12.84 percent. (*) 

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Penulis: Lia Sisvita Dinatri
Editor: Lia Sisvita Dinatri
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