Smoking is prohibited due to medical reasons; nevertheless, many countries still allow their people to smoke in certain areas, for example in Indonesia. This is due to the fact that by raising the cigarette excise duty by exactly 100 per cent, the country would acquire many advantages. It will create numerous new employment opportunities and even boost the workers’ annual incomes. This is good for Indonesia’s economic because eventually the country’s Gross Domestic Product (GDP) will be increased.
According to the latest research conducted by University of Indonesia, the government’s income from cigarette duties would rise by 7 to 9 per cent. The research shows that if the government increased the cigarette tax by 100 per cent, cigarette retail prices would increase by around 26 per cent and that cigarette companies would survive if the excise duty was increased from the current average of 31 per cent on factory prices. According to the research, the consume of cigarette would only decrease by 9 per cent.
This very small number will not necessarily ruin the cigarette company. Citing the research, doubling the excise duty would lead to an increase in the country’s GDP of Rp 335. 35 billion. The increase in the country’s GDP would make the business in the country in its best state and thus increase the development of our beloved country. This year, the government expects the $373 billion economy to expand by 6. 2 to 6. 6 percent due to increasing domestic consumption and commodity exports.
According to the 2005 National Socio Economic Survey, 7 out of 10 Indonesian households routinely allocated portions of their income for tobacco products. In addition, household expenditures on tobacco was much higher than on food items like fish, meat, eggs and milk, as well as vegetables and fruits. So clearly cigarette price is an essential part to the budget allocation. As household spending on tobacco products would decrease due to the higher cigarette retail prices, workers’ annual income would grow by Rp 491. 1 billion and there would be an additional 280,000 new employment opportunities as more money would be allocated for other types of household consumption. This is why Indonesian people’s prosperity would be better by increasing the cigarette excise duty and thus make the best of the country’s economic condition. There is one last benefit that Indonesia may acquire if the government would set this regulation: improve the health of the people. It is out of the question that smoking is bad for our health; it can cause lung cancer, heart disease, and other diseases.
As stated above, the consume of cigarette will decline if the government would increase the cigarette tax. If this occurs, of course the health of people will be improved and it is good for the society, as it is causing people to work their best and make better business, and eventually, the same result goes without saying: the country’s GDP will be increased. What is important here is that the government should ignore all the cigarette companies’ propaganda that increasing the cigarette tax would push them toward bankruptcy and worsen unemployment.
Because those two things are just not true. The research conducted jointly by the UI’s Demographic Institute and the Southeast Asia Tobacco Control Alliance is reliable. All in all, Indonesia’s government should increase the cigarette excise duty. By doing so, many positive contributions to the country are acquired. It improves Indonesia’s economic condition and ultimately other sectors. The people’s prosperity will increase quite rapidly and it will also improve Indonesian people’s health.