Tobacco excise tax policy in indonesia: Who does reap the benefits?

Dwi Budi Santoso, Angga Erlando

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

In Indonesian tobacco, excise tax policy never decrease every year. As a result, the number of tobacco industries sharply declines, however the prevalence of tobacco smoking steadily increase since 1995. Therefore, this research aims to estimate the increase of tobacco excise tax and its impact on cigarette consumption, government revenue, and the possibility of cigarette sold illegal ly. There are two analytical model, Logit and Tobit. Logit model is used to estimate the impact of cigarette price towards the probability of household member to smoke or not, and Tobit model is used to estimate the impact of price change towards the amount of cigarette consumption. Tobit model is employed since it include non-smoker household, covering 40% of total household. The estimation is based on SUSENAS published on March 2017. The result suggests increasing cigarette prices does not lessen people desire to be smokers; indicat ing that most Indonesian consider cigarette as basic needs. Consequently, the increase of tobacco excise tax leads to the growth of government revenue and number of illegally sold cigarette. Therefore, it conclude that large-scale industries benefit the most, when this result is linked to the decrease of tobacco industries data. Meanwhile, Indonesian people may get the benefit, if the government revenue is appropriately allocated to stimulate economic and development.

Original languageEnglish
Pages (from-to)1108-1121
Number of pages14
JournalEntrepreneurship and Sustainability Issues
Volume8
Issue number1
DOIs
Publication statusPublished - Sept 2020

Keywords

  • Logit
  • Prevalence of Tobacco Smoking
  • Tax Policy
  • Tobacco Excise
  • Tobit

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