A coalition of Indonesian civil society groups has rejected a government proposal to expand the national tobacco excise system. The groups argue that adding a new tariff tier could increase corruption risks and undermine public health objectives.
Proposed Expansion of Excise Tiers
Government officials have proposed the addition of a ninth tier to the existing tobacco excise structure. This move is intended to encourage illegal producers to enter the formal market, which officials maintain could help curb illicit trade and increase revenue.
The implementation of this new tier could occur as early as May 2026.
Concerns Over Public Health and Corruption
The Coalition Save Our Surroundings (SOS)—which includes Indonesia Corruption Watch (ICW), Seknas FITRA, and CISDI—claims the plan prioritizes revenue generation over the primary goal of controlling consumption.
Critics warn that the expansion could complicate the existing system and enable downtrading
, a process where consumers shift their preference toward cheaper products.
Risks of Misclassification
Indonesia Corruption Watch warned that additional tiers could open new avenues for corruption through the misclassification of products. Critics further argue that the move may create opportunities for manipulation and suffer from weak enforcement.
Rather than expanding the system, CISDI has recommended that the government simplify the current structure.
Potential Outlook
If the proposal moves forward, the system may develop into more complex, which civil society groups suggest does not address underlying enforcement challenges.
Depending on the government’s response to these objections, officials may either proceed with the May 2026 timeline or consider the simplification requested by advocacy groups.
Frequently Asked Questions
What is the primary goal of the government’s proposal?
Officials aim to encourage illegal producers to enter the formal market, which they believe could curb illicit trade and increase government revenue.
Which organizations make up the Coalition Save Our Surroundings (SOS)?
The coalition includes CISDI, Seknas FITRA, and Indonesia Corruption Watch.
Why do critics believe the new tier could lead to corruption?
Indonesia Corruption Watch warned that adding more tiers could allow for product misclassification, creating new opportunities for corruption.
Do you believe simplifying tax structures is more effective for public health than adding new tariff tiers?
