Indonesia: Tax Hike Too Small to Reduce Smoking, Activists Say

Source from:  Jakarta Globe (id)  10/12/2013

Health activists have rejected the Jakarta administration's planned 10 percent increase in the tax on tobacco, saying it would not be sufficient to curb the health-damaging practice, especially among youth.

"Cigarette prices in Indonesia are awfully cheap, and even if we raise the tax by 10 percent they will still be affordable for children," Tubagus Haryo Karbyanto from the Forum of Jakarta Residents (Fakta) told the Jakarta Globe on Thursday.

Many Indonesians begin smoking at an early age and are prey to companies competing to establish themselves as young people's preferred brand.

Jakarta city councilor Wanda Hamidah said the council initially wanted to raise tobacco tax by 100 percent to deter children from taking up the smoking habit.

The plan, however, was hampered by a tax law that prevents local governments from levying more than 10 percent tax on products for which central government excise has already been paid.

Tubagus said there was an approach that could bypass that problem, since the taxable price of cigarettes is based not on a brand's recommended retail price, but on a standard government "ceiling price."

"The government should have raised the ceiling price for cigarettes first before imposing the tax rise, only then could we see a significant result," he said.

The activist and local lawmaker confirmed that the city council was currently drafting a bylaw to raise the cigarette tax by 10 percent, effective in January 2014.

Wanda said that the price of cigarettes in Indonesia was among the cheapest in the world.

Cigarettes sell for a little over a dollar per pack of twenty in Indonesia, far less than in neighboring Malaysia, Thailand and Papua New Guinea, where a pack goes for $3 to $5. In developed countries like nearby Australia, aggressive taxes push the price of a pack up to $12, and keep the rate of smoking-related illness down.

Consumer advocate Tulus Abadi said a tax hike would not make much of a difference as long as cigarettes are being sold individually by street vendors.

"There should be a regulation banning the sale of individual cigarettes, and cigarette sales should not be permitted outside stores, where the ban on sales to children can be enforced," said Tulus, who manages the Indonesian Consumer Protection Foundation (YLKI).

Tulus said every product affected by excise should be heavily regulated.

"If excise is imposed we can safely assume the product is either addictive or can be harmful and therefore must be heavily regulated and if cigarettes are already classified as dangerous, why do we still sell them everywhere?" he said.

Jakarta Deputy Governor Basuki Tjahaja Purnama has been outspoken on the dangers of tobacco, lamenting the amount of money spent by poor households on smoking and the health costs having to be borne by the government.

He has previously estimated the capital city could earn Rp 400 billion ($34 million) in 2014 from the tobacco tax.

Half of the earnings, he said, would be used to improve the public health service and the enforcement of tobacco control regulations in the capital.

"Higher tax are intended to stop people from smoking. We can strengthen our preventive efforts with the money, and use the tax to publicise the dangers of smoking," Basuki said.

Tubagus said while tobacco control laws should be sufficient to curb the number of smokers, weak law enforcement meant no significant change had been observed in the capital.

"The deputy governor once said any civil servant caught smoking in a prohibited area will have their salary docked, we should monitor to see if this policy is properly implemented,' he said.

Tulus agreed, saying city bylaws regulating smoking were enforced inconsistently and even when sanctions were imposed they were a poor deterrent.

"Our survey recently revealed that violations of these regulations are still rampant. The government should be stricter in imposing punishments," he said.

The latest World Health Organization Global Adult Tobacco Survey, released in 2012, ranks Indonesia second after China in proportion of adults smoking.

The survey found that 67.4 percent of men and 4.5 percent of women in Indonesia were active smokers.

According to the WHO report, three of four Indonesian children between the ages of 13 and 15 are exposed to cigarette advertising on billboards and pro-tobacco messages at sporting events. The average age the nation's smokers take up the habit is 17.

The government has issued a regulation that will oblige all cigarette makers to include pictorial health warnings on cigarette packaging from June 2014.

Of the text warnings in use when the WHO report was compiled, 72 percent of smokers noticed health warnings on cigarette packages and 27 percent of them thought about quitting smoking because of those warnings.

The government also announced last year that it would increase excise by an average of 8.5 percent this year.

The powerful tobacco lobby has been actively campaigning to block regulations that would hurt its profits.

Activists say despite creating more state revenue, the industry absorbs money from families in lower income brackets, trapping them in a cycle of poverty.

A recent survey by the University of Indonesia found 57 percent of Indonesian households bought cigarettes and that cigarettes were the country's second-largest expense after rice. According to the survey, the average household spends Rp 36.5 million per decade on cigarettes.

Indonesia is among a handful of countries that has refused to sign an international tobacco control treaty. Enditem