Indonesia sparked an industry backlash by suddenly levying a 10% excise tax on e-cigarettes effective January 2024. But officials defend equalizing vapes with traditional cigarettes amidst growing public health concerns.
New Year Surprise Tax Irks Industry
The taxprovision emerged in Minister of Finance Regulation No. 143/PMK/2023 issued December 15th. It classifies e-cigarettes as taxable tobacco products for the first time.
Additionally, Regulation No. 191/2022 hikes tobacco excise rates approximately 10% across cigarettes, e-cigarettes and other nicotine vehicles.
But the Indonesian Personal Vaporizer Association blasted the poorly communicated, undiscussed policy. Since most manufacturers constitute small businesses, they argue the financial hit could cripple the emerging industry.
The Finance Ministry countered that e-cigarettes demand comparable taxation to traditional cigarettes. Citing aligned health risks, officials want to curb demand especially amongst youth.
Curbing Vaping's Meteoric Rise
Vaping prevalence in Indonesia skyrocketed tenfold over the decade until 2021. But the number of cigarette smokers still eclipses the vaping population at 70.2 million.
Affordability seemingly fueled vaping's surging popularity as a perceived smarter smoking alternative. The latest tax measure targets price parity between the two categories.
And in 2023, the Finance Ministry plans a 10% cigarette tax increase alongside a 15% excise hike for vapes. Whether pricing out e-cigarettes reduces uptake remains contentious.
Ongoing Tobacco Usage Growth Defies Global Trends
Contrary to declining worldwide smoking rates, Indonesia faces the opposite trajectory. In fact, the smoking population is forecast to rise from 112 million in 2021 to 123 million by 2030.
This outlier trend intensifies the need for strong anti-smoking and vaping deterrence. Hence officials defending urgent, sweeping taxation to combat encouragement towards unhealthy behaviors.
Health Risk Spotlight Alters Stance
Indonesia previously maintained a neutral posture as vaping rapidly emerged. But recent WHO reports condemned vaping and smoking as equivalently hazardous.
Other global health bodies linked vaping with heightened cardiovascular disease, lung damage, hypertension and more. These developments led Indonesia to follow international guidance urging financial disincentives.
Yet vaping still lacks the societal stigma associated with smoking. And securing Indonesia's over 17,000 islands poses monumental challenges preventing illegal imports.
So whether pricing out vapes curbs enthusiasm remains uncertain. But Indonesia faces clear urgency in confronting reversing smoking and vaping trends in opposition to global declines.
