PEBS FEB UI Webinar, “Excise Policy as a Community Protector and Urgency to Amend Law N0.39 / 2007”
Adela Miranti Yuniar ~ Junior Researcher PEBS FEB UI
Nino Eka Putra ~ PR of FEB UI
DEPOK – (23/10/2020) The Center for Sharia Economics and Business (PEBS) FEB UI in collaboration with The Union, held a public webinar with the topic “Excise Policy as a Community Protector and Urgency to Amend Law No. 39/2007 ”. The webinar was opened by remarks from Rahmatina A. Kasri, Ph.D., Head of PEBS FEB UI and was attended by 90 people and four speakers, namely Dr. Abdillah Ahsan (Director of HR UI), Nur Hadi Wiyono, M.Si. (Researcher of the Demographic Institute FEB UI), Meita Veruswati, M.K.M. (Lecturer at FIKES UHAMKA), and Dr. Rohani Budi Prihatin (Researcher of the DPR RI Expertise Body) moderated by Krisna Puji Rahmayanti, M.P.A. (FIA UI Lecturer), on Friday (23/10/2020).
As the first to speak, Abdillah Ahsan said that, the history of cigarette excise tax in Indonesia dates back to the Dutch colonial period in 1932, namely the Tabakaccijen Ordonantie stbl No. 517 of 1932, which was later changed during the Japanese colonial period to Osamu Seirai No. 27 of 1944. Indonesia’s cigarette excise policy continues to evolve with the issuance of several laws and government regulations in lieu of laws (Perpu) that regulate tobacco or cigarette excise.
Abdillah continued by saying that the role of excise as a community protector has a different philosophy from taxes. Taxes are state revenues, while excise is more directed at controlling or protecting people from consumption of goods that have a negative impact. Currently, there are three types of excisable goods (BKC), namely tobacco, ethyl alcohol, and beverages containing ethyl alcohol. The consumption of tobacco products as the main BKC which is dominated by cigarettes is increasing. In addition, Law no. 39 of 2007 is about 13 years old, so it needs to be amended to accommodate changes in society so that these regulations can continue to protect society.
Several proposed amendments to Law no. 39/2007 are 1) the imposition of a maximum excise duty rate of BKC HT of 57% of the Retail Selling Price (HJE) needs to be amended to a minimum excise rate of 66% or 2/3 of the HJE according to WHO recommendations; and 2) the regulation that the annual HJE increase must be higher than the inflation rate and economic growth. The higher the increase, the better because it can reduce the level of consumption. “The main objective of the excise policy is to control consumption as a societal protector. Meanwhile, the current cigarette excise policy is quite complicated, causing a loss of potential state revenue and minimal impact on reducing cigarette consumption.” Abdillah said.
Nur Hadi Wiyono, the second speaker, explained that the consumption of illegal cigarettes in 16 provinces in 2010 amounted to 6.2%, while the estimated illegal cigarettes produced in 2013 amounted to 8% of the market share. The market share of illegal cigarettes has decreased significantly, due to the consistent and massive efforts to enforce the law by the Directorate General of Customs and Excise (DJBC). High Risk Excise Issuance Program (PCBT), including: 1) Illegal Cigarette STOP campaign; 2) in-depth research on the recommendation of the cigarette distribution control unit in the marketing area; and 3) action and post-action handling in a sustainable manner.
In addition, Nur Hadi provided several policy recommendations, including the consistent increase in excise by the Government that needs to be balanced with comprehensive law enforcement, the elimination of duty-free for tobacco products at airports or ports, and the construction of a track and trace system for tobacco products (cigarettes). ).
The third speaker, Meita Veruswati, said that 2% of Excise Profit Sharing Fund (DBH-CHT) was distributed to tobacco-producing provinces , with the allocation policy being used to fund five main activities: improving the quality of raw materials, developing industry, fostering the social environment, socialization of provisions in the field of excise, and/or eradicating illegal BKC. However, the current implementation of the DBH-CHT policy still faces challenges, namely from the discovery of various activities in the use of DBH-CHT funds by regions that do not comply with the provisions.
Meanwhile, the allocation of DBH-CHT for health has been carried out consistently in various countries and has proven to have a positive impact on health. Meita explained that, “I recommend the policy to amend Law no. 39/2007, namely the allocation of DBH-CHT for National Health Insurance (JKN) and health promotion, health facilities and infrastructure, new job opportunities and comprehensive and on-target training, empowerment / business transfer / work of tobacco / clove farmers, workers in small cigarette industry and research on the use of tobacco / clove leaves, as well as empowering youth in the arts and sports.”.
Abdillah Hasan added that since 1991, the number of BKCs has never increased, as a result of which state revenues from excise are dominated by cigarette excise (95% of total excise revenue). Extensification to other goods is needed to follow changes in people’s behavior, when there are items where the consumption is increasing but causes public health or environmental problems. With the extensification, the cigarette excise tariff can be increased as high as possible, so that if there is a decrease in state revenue from cigarette excise, it can be substituted for revenue from other excise (for example gasoline). Some of the proposed BKC extensions are fuel, sweetened drinks, cigarette butts, motorbikes, cars, cooking oil, high-salt foods, paper, cell phones, and plastic bags.
As the fourth speaker, Rohani Budi Prihatin explained that,,since December 2016, the Indonesian Minister of Finance has launched the Customs and Excise Reform Strengthening Program (PRKC). Excise can be interpreted as a Sin Tax, because goods subject to excise are goods that should be avoided by the public, because they have an impact on externalities (health and the environment).
The Director General of Customs and Excise has a major role as industrial assistance and trade facilitator, community protector, and revenue collector. Its role as a community protector (slowing consumption for the sake of protecting the health and benefit of citizens) has not been carried out properly. “I recommend a policy, namely a change in the perspective of excise as a community protector; Key Performance Indicators (IKU) are required based on reducing consumption, law enforcement, and the recommended minimum cigarette excise tariff is 60%.” (hjtp)
For more information, watch the recorded webinar via the PEBS FEB UI Youtube page: https://www.youtube.com/watch?v=KYxr6liuCnI or download the speaker materials via https://pebs-febui.org/download/materi-webinar-kebijakan-cukai-sebagai-community-protector-dan-urgensi-amandemen-uu-cukai/