YLKI: Proposed Increase in Cigarette Excise in Harmony with Consumer-Protection Law

Indonesian Version

Marcell Sihombing, M. Agus Yozami/ANT

 

 
In a bid to control the number of smokers across Indonesia, the government is planning to impose a significant increase in cigarette excise. This increase is expected to result in a cigarette price hike from the current average price of IDR 15,000 per pack to IDR 50,000 per pack, and the plan is currently evoking praise and criticism in equal measure from Indonesian citizens.  
 
One of the supporters of the proposed price hike is the Indonesian Consumers Organization (Yayasan Lembaga Konsumen Indonesia – “YLKI”). Unfortunately however, this support has generated plenty of criticism from the country’s pro-tobacco lobby. According to YLKI Chief Executive, Tulus Abadi, the pro-tobacco lobby has accused his institution of being ignorant of the need for consumer protection for smokers, as the YLKI has voiced its strong support for the plan to increase cigarette excise.
 
“The pro-tobacco lobby is claiming that the YLKI is supposed to protect smokers instead of supporting the increase,” Mr. Abadi stated in a press release obtained by hukumonline on Tuesday, 23 August 2016.
 
Rebutting such accusations of ignorance, Mr. Abadi stated that the YLKI actually takes a strong interest in smokers, even prospective smokers. However, this concern most definitely cannot be compared to consumer protection in relation to other commodities such as food, beverages, medicine or various service-provision sectors. According to Mr. Abadi, cigarettes are an “abnormal product” due to the fact that this particular commodity is subject to excise, which can be viewed as a “sin tax”.  Meanwhile, “normal commodities” (e.g. foods, beverages, and various service-provision sectors) are subject to tax instead of excise.
 
“There is a sin tax on cigarettes because cigarettes have a negative impact upon smokers, passive smokers and the environment as a whole,” Mr. Abadi argues.
 
Mr. Abadi also points to the fact that cigarettes are an example of products that violate Law No. 8 of 1999on Consumer Protection (“Consumer Protection Law”), which they do for several reasons.
 
Firstly, the Consumer-Protection Law requires that the packaging of any products specify their expiration date, however no cigarette cartons specify such information. Secondly, the Consumer Protection Law also stipulates that any product must specify its composition or contents, yet no cigarette product ever specifies its exact composition, despite the fact that a single cigarette may contain over 4,000 different chemicals and substances. Thirdly, no cigarette packaging in Indonesia describes all of the possible side effects of smoking, while the Consumer Protection Law demands that all products list relevant information pertaining to any possible side effects which may arise as a result of their consumption.
 
Furthermore, Mr. Abadi also claims that cigarettes violate the provisions set out under Law No. 33 of 2014 on Halal Products (“Halal Product Law”). In this regard, Mr. Abadi questions whether cigarettes even fall into the category of halal products as described under Islamic Law. Mr. Abadi also stated in his press release that the Halal Product Law does not acknowledge any products which are categorized as makruh, or products which are not strictly forbidden under Islamic law yet which are better avoided.  
 
“Halal certification is only for halal products, and does include any which are deemed makruh,” Mr. Abadi claimed.
 
Ultimately, Mr. Abadi is convinced that consumer protection for smokers may be demonstrated through various measures, such as minimizing cigarette consumption and its negative side effects through a significant increase in the price of cigarettes. Moreover, such consumer-protection efforts may also take the form of strict controls over the sale of cigarettes, picture-based warnings on cigarette packages, a total ban on cigarette advertisements and promotions, as well as the strict enforcement of non-smoking areas.  
 
In his representative role for the YLKI, Mr. Abadi stated that a more expensive retail price for cigarettes would offer an ideal level of consumer protection for both smokers and non-smokers alike. Moreover, cigarettes sold at highly affordable prices, as they are now, in fact nullify any notion of proper consumer protection for smokers, who mainly comprise of low-income families, children and teenagers.
 
Taking a more cautious line, Lawmaker Heri Gunawan from Commission XI of the House of Representatives sought to remind to the government that it should thoroughly review the plan to increase cigarette excise before implementing it. Indeed, Mr. Gunawan believes that the current plan will only lead to problems in the future if it is not carefully considered.
 
By way of example, Mr. Gunawan went on to highlight the issue of unemployment, which may ultimately result in an increase in the number of underprivileged citizens. Mr. Gunawan referred back to 2014, when the tobacco industry employed a total of 5.98 million workers, comprising of 4.28 million workers employed in manufacturing and 1.7 million workers in the tobacco-plantation industry.
 
Moreover, Mr. Gunawan also believes that the price hike will harm the state, as the excise currently generated by the tobacco industry amounts to more than 90% of the state budget. In 2015, for example, the tobacco industry generated IDR 144.6 trillion for Indonesia.
 
However, the industry has now been affected and reduced by many new policies relating to cigarettes, as can be seen in the total number of cigarette factories operating, which decreased from 4,669 to only 700 factories in 2015. In this regard, Mr. Gunawan expects the government to show wisdom in any determination of cigarette-price increases.