Who has never known cigarettes? One of the items that has always been a dilemma among Indonesian people. On the one hand, smoking can cause various kinds of diseases, as depicted in the horrible cigarette packs. On the other hand, cigarettes are one of the industrial commodities that produce fantastic amounts in production and sales. Is it really so?
Cigarettes are rolled or rolled tobacco rolled or wrapped in paper, leaves or corn husks, the size of a little finger with a length of 8-10 cm, usually smoked by someone after burning the tip.
The main raw materials for cigarettes are tobacco leaves. Tobacco can grow throughout Indonesia with its tropical climate. Even the best tobacco comes from the Temanggung area with its Srintil tobacco, Deli City which is nicknamed “Dollar Land” by Karl J. Pelzer, author of the book Toean Keboen and Farmers: Colonial Politics and Agrarian Struggle (1976), Lombok with the very popular type of Happy tobacco , Madura especially the city of Pamekasan with Campalok tobacco which is very limited and rare, and lastly Besuki na-oogst tobacco which is very elastic which is suitable for use as cigar wrappers from Jember city.
Cigarette Production in Indonesia is Huge. Cumulatively, cigarette production from January to June or the first half of 2022 reached 147.90 billion sticks. Fantastic value. The production value is directly proportional to state revenue from cigarette excise and Value Added Tax (VAT) which has relatively increased from year to year. State revenue from customs and excise worth IDR 185.1 trillion until July 2022.
The Deputy Minister of Health stated that smoking habits contribute to the second largest percentage of deaths in Indonesia after hypertension. “So if we look at it, smoking contributes to the number two cause of death and comorbidities after hypertension, the number is above diabetes and obesity.”
The dangers of smoking are also things that must be conveyed by every cigarette manufacturer through pictures of the disease depicted on cigarette packs. Among other things, pictures of lung cancer, coronary heart disease, cancer of the esophagus and throat, hypertension, impotence. In addition to active smokers, the danger of this disease also threatens passive smokers.
Tax Policy on Cigarettes
Regulations regarding VAT on tobacco products are contained in Minister of Finance Regulation (PMK) Number 63/PMK.03/2022 which is a regulation derived from the HPP Law.
In Article 3 paragraph (1) it is stated that the VAT imposed on the delivery of tobacco products as referred to in Article 2 paragraph (1) is calculated by multiplying the VAT rate with the Other Value as the basis for imposition of Tax. In article 3 paragraph (2) the VAT rate (a) is 11% which will take effect on April 1, 2022; and (b) in the amount of 12% which comes into effect at the time the VAT rate is applied as stipulated in Article 17 paragraph (1) letter b of the VAT Law.
The other value referred to in Article 3 paragraph (1) is determined by the Formula 100/100+t multiplied by the retail selling price of tobacco products, and t is the VAT rate as referred to in Article 3 paragraph (2). So it can be concluded that the amount of VAT payable on the delivery of tobacco products is set at 9.9% as a result of calculating the VAT rate that applies on April 1, which is 11% with another value that refers to the formula: 100/(100+VAT rate). This amount could be even higher, namely to 10.7% if the government imposes a VAT rate of 12% which is planned to be carried out no later than 2025, as stipulated in Article 7 of the HPP Law.