Indonesia Slaps 10% Tax on E-Cigarettes Starting January 1st 2024

Indonesia is imposing a 10% tax on e-cigarettes starting January 1st, 2024. The tax aims to limit vaping rates and aligns with recent warnings about e-cigarette dangers from the World Health Organization (WHO).

New Taxes Treat Vapes Like Cigarettes

Per Indonesia's Finance Ministry Regulation No. 143/PMK/2023 issued on December 15th, 2023, e-cigarettes now fall under taxable tobacco products. A 10% cigarette tax will apply on top of existing tobacco excise levies.

The excise taxes on conventional cigarettes also increased by 10% on average effective January 1st, 2024 under Regulation No. 191/2022. By taxing vapes similarly to traditional cigarettes, Indonesia intends to curb rising e-cigarette adoption.

Concerns Over Public Health Impacts

According to ministry spokesperson Deni Surjantoro, the goal is "providing a level playing field" across all nicotine delivery systems. The assumption is that e-cigarettes likely pose similar public health risks relative to smoking.

Initially, vapes seemed a safer alternative for smokers looking to quit combustibles. However, rapidly increasing youth vaping rates prompted policymakers’ intervention. With flavorings and discreet designs enticing ever-younger users, officials grew concerned over nicotine addiction beginning earlier in life.

Vaping Industry Objects

Some Indonesian vaping associations objected to the new taxes being enacted without stakeholder consultations. As a newer industry dominated by small and medium enterprises (SMEs), they worry the sudden tax hikes could devastate fledgling businesses.

Secretary-General Garindra Kartasasmita of the Indonesian Personal Vaporizer Association (APVI) told reporters: "The plan was never communicated and discussed with us before...Most industry players [are] micro, small and medium enterprises."

Whether the policy achieves public health aims without damaging local vape manufacturers remains to be seen. However, Indonesia appears committed to curbing e-cigarette adoption through financial disincentives.

Smoking Rates Projected to Grow

Ironically, while targeting vapes, Indonesia still forecasts growing cigarette usage nationwide. Per Statista consumer data, Indonesia had 112 million adult smokers in 2021. Smoking rates are expected to climb to 123 million Indonesian smokers by 2030.

Clearly, combustible cigarettes remain deeply entrenched in Indonesian culture. Whether vape taxes alter their upward trajectory looks unlikely. But officials hope to at least slow the growth of e-cigarette usage through reduced affordability.

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