The Indonesian vape industry is opposed to the tax plan for 2024.

According to the Indonesian news network JawaPos, the discussion of a tax on e-cigarettes in 2024 has caused opposition in the Indonesian industry. Some argue that this will further burden the emerging and predominantly small and medium enterprises (UMKMs) sector.

 

In addition, the industry believes that the plan to tax vapes does not have a solid legal basis and instead shows the injustice of the government. Garindra Kartasasmita, Secretary-General of the Indonesian Association of Personal Atomizers (APVI), said that the implementation of the tax on vapes in 2024 lacked sufficient social advocacy and placed a burden on business operators.

 

According to Galindra, the e-cigarette industry is still feeling the pinch from the 15 percent increase in tobacco tax rates in 2023 and 2024.

 

“Especially if coupled with a 10% tax on cigarettes, vapes will face a nearly 30% tax increase.” This is unfair and disturbing to the emerging industry, most of which are UMKM practitioners, “said Galindra Kartasasmita.

 

Galindra explained that according to Article 33 of Act No. 1 of 2022, on financial relations between the central government and local governments, the subject of tobacco tax includes cigarettes, cigars, tobacco leaves, and other tobacco products.

 

“E-cigarettes come in different shapes and work principles and produce different products. This makes us question why we are treated as other tobacco products (and therefore subject to cigarette taxes), “Galindra Kartasasmita said.

 

Galindra hoped that the government, in this regard especially the Director General of Fiscal Balance (DJPK), would be more impartial in implementing the tax on e-cigarettes. When traditional cigarettes were taxed, a five-year transition period was given.

 

“When the tobacco tax was first implemented in 2014, there was no increase in the tax rate to prevent the triple shock of the tobacco tax, Retail price (HJE), and tobacco tax, which greatly affected retail prices and in turn reduced consumers’ purchasing power,” Galindra Kartasasmita added.

 

APVI hopes that policy development will be carried out openly and transparently, especially for the affected industry practitioners. Galindra Kartasasmita lamented that so far APVI has never been invited to participate in the communication on the implementation plan of the vape tax. In particular, the tobacco tax is planned to be abruptly implemented in 2024.

 

“This will hit the entire e-cigarette and smoke industry hard. We oppose the implementation of a tax on vapes in 2024 due to the lack of social advocacy. This policy of sudden and no communication is very unreasonable and difficult to accept, “Galindra Kartasasmita said.