Govt Plans to Impose Excise Duty on Carbonated Drinks in Bid to Boost Public Health


Marcell Sihombing, Rofiq Hidayat
 
As the end of 2015 draws ever nearer, the government is redoubling its efforts to realize its targeted customs and excise revenues ready for the 2016 state budget. With this end in mind, the Ministry of Finance’s Directorate General of Customs and Excise has proposed that carbonated drinks and drinks containing artificial sweeteners be included on the government’s list of excise goods starting next year.
 
This proposal has been lauded by lawmaker Muhammad Misbakhun (Commission XI), who has revealed that establishing new taxable objects is a must if the government really wants to achieve its targeted customs and excise revenue of IDR 186.52 trillion for the 2016 state budget.
 
“The proposal is in line with the results of a meeting which was held between the House of Representatives [House] and the Ministry of Finance not too long ago. It was decided at this meeting that imposing excise on a product can increase state revenue,” asserted Mr. Misbakhun in a press release dated 5 November 2015.
 
According to Mr. Misbakhun, it is necessary to impose excise upon carbonated drinks for reasons of public health, as such products are a primary cause of obesity. This fact has convinced Mr. Misbakhun that the imposition of excise on these products will prove beneficial in terms of both increasing state revenue and tackling public-health issues.
 
Mr. Misbakhun further points to Article 2 (1) of Law No. 39 of 2007 on Excise (Excise Law) to backup his opinion. The provision defines goods which can be subject to excise as, “…certain goods having a nature or characteristics that require that their consumption be controlled and their distribution supervised, as the consumption of these products can result in negative effects on society or the environment. Their use also needs to be subject to state quotas for reasons of fairness and equilibrium”.
 
Based on these prescriptions, Mr. Misbakhun believes that carbonated drinks already fit the bill as goods that are allowed to be subject to excise, not to mention the other benefits that will accrue from effectively supervising their distribution. Mr. Misbakhun therefore strongly suggests that the government should not hesitate in imposing excise on carbonated drinks, especially in light of the fact that many countries, including the United States, Mexico, Singapore, India, Thailand, and Laos, already impose excise on these beverages, which has resulted in a significant rise in their state revenue.
 
“The United States was the first country to impose excise on carbonated drinks, even though they are the world’s main producer of these products,” explained Mr. Misbakhun.
 
On previous occasions, the Director General of Customs and Excise, Heru Pambudi, has stated his institution’s desire to immediately calculate the potential excise value of soft-drink products and reinforce the reasons behind the imposition of excise.
 
In accordance with state-budget allocations, Mr. Pambudi has requested to levy a new excise on carbonated drinks and drinks containing artificial sweeteners. However, which specific products will ultimately become subject to this excise has yet to be determined. Mr. Pambudi further revealed that these two types of products had long been deliberated as potential new sources of state revenue, due to their detrimental impact on public health.
 
“We don’t wish to solely focus on increasing state revenue, but also want to take consumption and distribution controls into consideration. Even if the revenue generated as a result of this excise ends up being pretty insignificant, the regulation may still end up bringing about stronger controls over these products, and so this new excise should still be implemented,” concluded Mr. Pambudi.

(sp)

Marcell Sihombing, Rofiq Hidayat
 
As the end of 2015 draws ever nearer, the government is redoubling its efforts to realize its targeted customs and excise revenues ready for the 2016 state budget. With this end in mind, the Ministry of Finance’s Directorate General of Customs and Excise has proposed that carbonated drinks and drinks containing artificial sweeteners be included on the government’s list of excise goods starting next year.
 
This proposal has been lauded by lawmaker Muhammad Misbakhun (Commission XI), who has revealed that establishing new taxable objects is a must if the government really wants to achieve its targeted customs and excise revenue of IDR 186.52 trillion for the 2016 state budget.
 
“The proposal is in line with the results of a meeting which was held between the House of Representatives [House] and the Ministry of Finance not too long ago. It was decided at this meeting that imposing excise on a product can increase state revenue,” asserted Mr. Misbakhun in a press release dated 5 November 2015.
 
According to Mr. Misbakhun, it is necessary to impose excise upon carbonated drinks for reasons of public health, as such products are a primary cause of obesity. This fact has convinced Mr. Misbakhun that the imposition of excise on these products will prove beneficial in terms of both increasing state revenue and tackling public-health issues.
 
Mr. Misbakhun further points to Article 2 (1) of Law No. 39 of 2007 on Excise (Excise Law) to backup his opinion. The provision defines goods which can be subject to excise as, “…certain goods having a nature or characteristics that require that their consumption be controlled and their distribution supervised, as the consumption of these products can result in negative effects on society or the environment. Their use also needs to be subject to state quotas for reasons of fairness and equilibrium”.
 
Based on these prescriptions, Mr. Misbakhun believes that carbonated drinks already fit the bill as goods that are allowed to be subject to excise, not to mention the other benefits that will accrue from effectively supervising their distribution. Mr. Misbakhun therefore strongly suggests that the government should not hesitate in imposing excise on carbonated drinks, especially in light of the fact that many countries, including the United States, Mexico, Singapore, India, Thailand, and Laos, already impose excise on these beverages, which has resulted in a significant rise in their state revenue.
 
“The United States was the first country to impose excise on carbonated drinks, even though they are the world’s main producer of these products,” explained Mr. Misbakhun.
 
On previous occasions, the Director General of Customs and Excise, Heru Pambudi, has stated his institution’s desire to immediately calculate the potential excise value of soft-drink products and reinforce the reasons behind the imposition of excise.
 
In accordance with state-budget allocations, Mr. Pambudi has requested to levy a new excise on carbonated drinks and drinks containing artificial sweeteners. However, which specific products will ultimately become subject to this excise has yet to be determined. Mr. Pambudi further revealed that these two types of products had long been deliberated as potential new sources of state revenue, due to their detrimental impact on public health.
 
“We don’t wish to solely focus on increasing state revenue, but also want to take consumption and distribution controls into consideration. Even if the revenue generated as a result of this excise ends up being pretty insignificant, the regulation may still end up bringing about stronger controls over these products, and so this new excise should still be implemented,” concluded Mr. Pambudi.

(sp)
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