Indonesian Minister of Finance Sri Mulyani Indrawati yesterday proposed new duties on sweetened drinks, vehicles that emit carbon dioxide and plastic bags, to control consumption of the products in Southeast Asia’s largest economy.
The proposal comes amid weak tax collection after the economy grew at its slowest pace in three years last year.
Indonesia had a nearly US$15 billion revenue shortfall last year due to weak company profits and falling exports.
The proposal is to levy excise taxes ranging from 1,500 rupiah to 2,500 rupiah (US$0.11 to US$0.18) per liter on sugar-sweetened and artificial sugar-sweetened beverages, such as bottled tea, coffee, carbonated soft drinks and energy drinks, the minister told a hearing with parliament’s finance commission.
The aim is to cut consumption of sweet drinks, Indrawati said, adding that the prevalence of diabetes and obesity levels have steadily increased in the past decade.
Some 2 percent of Indonesians age 15 and above had diabetes in 2018, up from 1.1 percent in 2007, while the number of obese adults rose from 10.5 percent in 2007 to 21.8 percent in 2018.
Indrawati also brought up again her 2017 proposal to impose an excise tax of 200 rupiah per bag on plastic bags, which parliament has not yet approved. The levy, though small, could halve Indonesia’s consumption of plastic bags to 53,533 tonnes a year, she said.
The government also wants to impose duties on new vehicles that emit carbon dioxide as part of efforts to control pollution, the minister said. The tariffs would vary depending on emission levels and other aspects, she said, without providing details.
The total additional revenue expected from all three measures per fiscal year is 23.56 trillion rupiah — 1.61 trillion rupiah from plastic bags, 6.25 trillion rupiah from drinks and 15.7 trillion rupiah from vehicles, she said.
Indrawati did not say when the government plans to begin collecting the excise taxes.
Indonesian Food & Beverage Association chairman Adhi S. Lukman said that the proposal would jack up prices and hurt people’s purchasing power.
“Basically, there is no data that shows applying excise will reduce the risk of noncommunicable diseases and obesity, if that’s the intention,” he said, adding that he would lobby against the measure.
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