Top Takeaways:
- Government keeps excise rates unchanged to prevent layoffs in tobacco industry.
- Finance minister says focus will shift to cracking down on illegal products.
- Policy marks second year without hikes after years of steady tax increases.
Indonesia will leave excise tax rates on tobacco products unchanged in 2026, Finance Minister Purbaya Yudhi Sadewa said Friday, citing the need to protect jobs in the sector while intensifying efforts against the black market.
“We decided not to increase excise tax rates for tobacco products next year, but we will clean up the market of illegal tobacco products,” Purbaya told reporters, adding the freeze was aimed at avoiding layoffs.
The decision followed talks with the Indonesian Cigarette Manufacturers Association, which had urged no rate change for 2026. It marks the second consecutive year Jakarta has paused tobacco excise hikes, after more than a decade of near-annual increases.
Officials previously argued that higher rates had done little to reduce smoking prevalence but had instead pushed many smokers toward cheaper brands or illicit products.
Indonesia, home to one of the world’s largest smoking populations, raised tobacco excise almost every year since 2014 before halting hikes in 2025. The health ministry estimates 70 million Indonesians smoke, with 7.4% of them aged between 10 and 18, underscoring the policy’s public health implications.
