Recently, according to local Indonesian media DETIK, the Paguyuban Asosiasi Vape Nasional Indonesia (PAVENAS), composed of the Asosiasi Personal Vaporizer Indonesia (APVI), The Indonesia Vapers Association (AVI), the Indonesian E-Liquid Manufacturers Association (PPEI), the Indonesian E-Cigarette Entrepreneurs Alliance (APPNINDO), and the Bali Vaporizer Association (AVB), visited the Ministry of Finance in Jakarta. They requested the government to postpone the imposition of cigarette taxes on electronic cigarettes until 2027 and urged that no additional consumption tax be imposed when collecting cigarette taxes.
PAVENAS also encouraged the government to ensure transparency and fairness in policy formulation, allowing direct participation of businesses.
Garindra Kartasasmita, the Secretary General of APVI representing PAVENAS, stated that the plan to impose e-cigarettes taxes on electronic cigarettes alongside an increase in consumption tax is a heavy blow to entrepreneurs, consumers, and industry participants.
“Moreover, we were not informed or consulted beforehand regarding this proposal.It should be taken into account that the electronic cigarette industry is a relatively new industry, with most industry participants coming from communities and small and medium-sized enterprises,” he said.
Garindra emphasized that the plan to impose the current 10% cigarette tax on electronic cigarettes while raising the consumption tax on disposable vape e-cigarettes by 15% (as stipulated by PMK No. 192 of 2022) would impose a heavy burden on the industry.
“Should this be implemented, the tax load on the electronic cigarette sector is projected to surpass 25% by 2024. This amount is even higher than the increase in traditional cigarette consumption tax in 2020,” he said.
Garindra stated that the plan to impose cigarette taxes on electronic cigarettes in 2024 seems rushed and lacks careful consideration. The affected parties were not involved in the entire formulation process.
“We urge the government to provide wisdom regarding the plan to impose cigarette taxes on electronic cigarettes. The information related to this argument was only conveyed on November 28, 2023, during the 2024 Consumption Tax Sector Policy Socialization Meeting by the Directorate General of Budget and the Directorate General of Customs and Excise, stating that it will take effect on January 1, 2024. In other words, in less than a month,” he said.
Furthermore, he emphasized, “Rather than participating in substantive discussions, we promptly voiced our apprehensions about the sudden implementation schedule and the threefold repercussions.”
Therefore, PAVENAS urges the government to at least postpone the imposition of cigarette taxes on electronic cigarettes for 5 years. This request reflects the implementation situation of traditional cigarette taxes, which also had a transitional period.
“We hope that the policy-making process related to the vape industry can be conducted openly and transparently, allowing regulated industry participants to be involved. This is crucial for the overall business continuity of the industry, including investment and employment,” he said.
After receiving no response to two letters and a hearing request, PAVENAS decided to go directly to the Ministry of Finance to demand an explanation and increased transparency, especially from the Directorate General of Budget.
PAVENAS members hope that through their direct presence, the government will be willing to discuss and hold hearings with all parties affected by the imposition of electronic cigarette taxes in 2024.
Garindra concluded, “If cigarette taxes are still imposed on electronic cigarettes in 2024, we are prepared to take legal action to seek justice for business actors.”
