Jakarta. Senior economist at the University of Indonesia, Lana Soelistianingsih, said the government’s cigarette excise policy remains a dilemma as it must balance state revenue, public health, and industry sustainability.

During an interview on Monday, Lana noted that tobacco excise is among the country’s largest non-tax revenue sources but carries significant consequences for the cigarette industry and its workers.

“Excise has been raised up to 57 percent. Cigarettes are inelastic goods, consumers keep buying despite price hikes, but the impact on factories and jobs is very real,” she said.

On the positive side, Lana said higher excise is expected to reduce cigarette consumption per pack, which could lessen public health risks. Still, she questioned whether the policy has effectively lowered the number of patients with smoking-related illnesses.

The downside, she added, is no less serious. Higher excise has triggered layoffs in the cigarette industry and pushed some consumers toward cheaper local brands or even illegal and imported cigarettes, undercutting domestic producers and foreign exchange earnings.

Lana also floated the idea of requiring smokers to pay additional premiums under the national health insurance scheme, BPJS Kesehatan, similar to private insurance models. “If smokers are charged extra, they may think twice before continuing the habit,” she said.

Ultimately, she underscored that the excise policy must be carefully calculated. “From the health side, it is expected to suppress consumption, but from the economic side, it risks boosting imports and hurting local industry. A balanced approach is essential,” Lana concluded.

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