The Tax Rate Of Tobacco In Indonesia Economics Essay

“ Indonesia is 3rd state with the most tobacco users in the universe, which reached up to 65 million ” ( Dwijayadi & A ; Soebijoto, 2010 ) . This is unsafe and besides good for the state at the same clip. The benefit is authorities will acquire more gross from the coffin nail revenue enhancements and it besides generates grosss for baccy husbandmans. However, is the benefit of baccy industry exceeds the danger of coffin nails?

Government additions immense gross from baccy industry. Harmonizing to Khalid, the gross that the authorities gained from coffin nail revenue enhancement is about 10 per centum from the whole gross in Indonesia ( ) . However, the authorities still imposed low revenue enhancement on coffin nails compared to ASEAN states. Government besides did non desire to fall in Framework Convention on Tobacco Control

The consumers are on the contrary enduring the negative impact of baccy industry. Cigarettes are non merely deteriorating the wellness of the tobacco users, it besides affects the people around it ( inactive tobacco users ) . Health is non merely the baccy industry is assailing. Harmonizing to smallcrab, a wellness web site, coffin nail ingestion is one of the grounds that caused poorness in Indonesia ( ) .

Farmers of baccy are besides affected by the policy that the authorities make sing to the policy of coffin nail revenue enhancement. They are threatened to lose their occupation because the authorities is raising the coffin nail revenue enhancement. However, this does non go on overnight, authorities can make new work field for these baccy husbandmans.

There are a batch of people that is being affected by baccy industry. In this paper, author will discourse about the impact of baccy industry in Indonesia. Besides, author will find whether authorities should increase coffin nail revenue enhancement or non.

1. Introduction

Cigarette has created mass sums of gross and contributed to Gross National Product in Indonesia. Many industries have produced coffin nails in all sorts of signifiers and monetary values. Presently, Indonesia placed as the 3rd state who consumes most coffin nails. This is somehow good and unsafe at the same clip. The benefit is that the state adds their Gross National Product and increase gross from the coffin nails. The unsafe portion is that more consumers are possible to hold lung malignant neoplastic disease in the hereafter.

Government has made a batch of ordinances sing to this job. The aim is to diminish the consumers of coffin nails because it is degrading the wellness qualities of the consumers and deteriorating the nature. “ The ordinances that has been made in Indonesia sing to coffin nails are ‘Chapter 9: Kawasan tanpa Rokok, Pembatasan Promosi Industri Tembakau untuk Anak dan Remaja, Kemasan dan Pelabelan, Peringatan Kesehatan dan Tuntutan Umum ‘ ; this regulates the topographic point to utilize coffin nails and the prohibited coffin nail use and publicity in Indonesia, ‘PP no 19: Tentang Pengamanan Rokok Bagi Kesehatan ‘ ; ‘UU Pajak Daerah dan Retribusi Daerah No 28 Tahun 2009: Pajak Rokok ‘ this regulates the forbidden use of coffin nails for keeping the society ‘s wellness, ; this regulates the revenue enhancements levied on coffin nails, etc ” ( Siswanty, 2010 ) .

“ Presently, the revenue enhancements levied on coffin nails are varied depending on the type of coffin nail. The monetary values of coffin nails are varied excessively harmonizing to the natural stuffs, the revenue enhancement levied, and the trade name image ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . The more revenue enhancements levied on the coffin nails, the more expensive the monetary value of coffin nails. The intent of the excise revenue enhancement on the coffin nails is to diminish the consumers of coffin nails. Harmonizing to Adioetomo et Al. ( 2001 ) “ the increasing of revenue enhancement on coffin nails by 10 per centum will diminish the figure of coffin nail consumers by 3 per centums, besides increasing authorities gross from the coffin nail revenue enhancement by 6,7 per centum ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . This proves that the revenue enhancement levied on coffin nails is good to the authorities and to the environment. However, there are contentions associating to the increasing of coffin nail revenue enhancement in Indonesia. “ The caput of GAPPRI ( Gabungan Perserikatan Pabrik Rokok Indonesia ) , Ismanu Soemiran said that the revenue enhancement levied on coffin nails could ache the husbandman of baccy and clove ” ( Ketua GAPRI: Pajak Rokok Berganda Rugikan Petani, 2009 ) . This is because mills will detain the purchase of the natural stuffs from the husbandman and the husbandman will endure loss.

There are a batch of contentions sing to the coffin nail revenue enhancement. It is said that the coffin nail revenue enhancement in Indonesia is low comparing to other states such as Vietnam, Philippines, India, Bangladesh, and Thailand. In this paper, we will discourse and analyse the impact of increasing and decreasing of coffin nail revenue enhancement. Writer will besides happen out whether the authorities should increase the revenue enhancement of baccy in Indonesia sing the benefits authorities, consumers, and baccy husbandmans.

2. Cigarette Tax in Indonesia

“ Cigarette is a chopped baccy that is wrapped in a cylindrical paper signifier ” ( Martin, 2008 ) . Cigarettes have been used by people to smoke baccy and could take to dependence. This carries job to both active and inactive tobacco users. “ Smoking could do many jobs and diseases such as bosom onslaught, sterility, powerlessness, asthma, lung malignant neoplastic disease, bronchitis, and other unsafe diseases ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . “ It besides causes the inactive tobacco users to hold external respiration diseases and could do sudden decease to babes and babies ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . The figure of deceases caused by coffin nails is increasing every twelvemonth.

Cigarette use in Indonesia is a serious concern to the authorities. Indonesia is the 3rd state with the most tobacco users. Harmonizing to Tobacco Economics in Indonesia, “ In Indonesia, there are 57 million people smoking coffin nails, 63 per centum of them are big male tobacco users and 4,5 per centum of them are big female tobacco users ” ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) . This has been a concern of authorities. The Numberss of tobacco users in Indonesia has been increasing throughout the twelvemonth. “ It can be seen in the chart 1.1 that tobacco users in Indonesia have been increasing from 1970 -2001 ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) .

Chart 1.1

In this chart, author compares the figure of consumers smoking to the monetary value of existent coffin nails. Apparently, it is shown in the chart that for the last 32 old ages, the figure of tobacco users in Indonesia is invariably increasing despite the increasing monetary value of coffin nails. It fluctuates, nevertheless still non diminishing the figure of tobacco users. This proven that the society has non cognizant about the danger of smoke and what it does to other people.

Government has made ordinances and limitations due to this job. The aim of the ordinances and limitations is to cut down the figure of tobacco users in Indonesia. “ In order to cut down the figure of tobacco users, authorities has made ordinances to all baccy industry to set a label on a coffin nail battalion written ‘Government warning: Smoke amendss wellness ‘ ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . Government besides restricted public country to go a topographic point to smoke. Government created non-smoking countries such as in eating houses, promenades, infirmaries, etc. “ Cigarettes commercial besides being banned by the authorities to demo coffin nails commercial and merely allowed to demo it between 21:30 – 05:00 ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . However, these ordinances did non efficaciously cut down the figure of people smoking.

Government so raises the revenue enhancement levied on coffin nails. This has been the most effectual manner to cut down the figure of tobacco users in Indonesia. Harmonizing to Adioetomo et Al. ( 2001 ) , “ the increasing of revenue enhancement on coffin nails by 10 per centum will diminish the figure of coffin nail consumers by 3 per centums, besides increasing authorities gross from the coffin nail revenue enhancement by 6,7 per centum ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) . This statement supports that the increasing revenue enhancement of coffin nails connected to the decrease of tobacco users in Indonesia.

In chart 1.1, it is shown that the figure of coffin nails consumers fluctuates between twelvemonth 1970 – 2001. It can be seen that the figure of tobacco users is increasing every twelvemonth this can be caused by two factors, low monetary value of coffin nails and increasing income. During 1980 until 1982, the existent monetary value of coffin nails was at the extremum and the consumers of coffin nails get downing to diminish. From 1980, the monetary value of coffin nails is increasing nominally from twelvemonth to twelvemonth. In 1990, it increases from Rp360,00 per battalion in 1980 to Rp700,00 per battalion. In 2000, the monetary value of coffin nail per battalion is Rp2.955,00, nevertheless this does non diminish the figure of tobacco users. This is likely because the increasing of income and buying power of consumers.

Chart 1.2: Cigarette Tax Rate 2004-2005

Beginning: Ayda Yurekli, Presentation to meetings on baccy economic sciences, Bloomberg Foundation, New York, November 2007

Harmonizing to chart 1.2, Indonesia still has the lowest per centum of coffin nail revenue enhancement comparison to other low income states. The norm of revenue enhancement levied on baccy is about 37 % of gross revenues monetary value ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) . “ If compared to the planetary benchmark which is 70 % of gross revenues monetary value, Indonesia coffin nail revenue enhancement rate is still low ” ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) . “ Indonesia ‘s authorities has regulated that the lower limit tolerable coffin nail revenue enhancement is 31 per centum of HJE ( Harga Jual Eceran ) and the maximal tolerable coffin nail revenue enhancement is 57 per centum of HJE ” ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) . Harmonizing to Wahyuningsih, WHO rate Indonesia as a state that is afraid of raising the monetary values and revenue enhancements on coffin nails ( Wahyuningsih, 2010 ) . This is why the baccy industry in Indonesia is successful. The authorities imposes low revenue enhancements and monetary values on the baccy.

3. Deductions of Tobacco Taxes

3.1 The deductions of Tobacco Industry on Indonesian Government

Tobacco industry sector is one of the popular subjects associating to the economic system. Many beginnings in media information inform that baccy industry is a “ gift ” for the economic system. On the contrary, there is besides another group of people who does non hold with this statement. Peoples who gain benefit and active in the industry of baccy will be given to support statement that supports the being of baccy. Others who disagree will ever happen the negatives of baccy usage.

For this subdivision, this paper will analyze the consequence of baccy industry towards sectors in economic system and likely in other countries excessively.

One impact which is really “ felt ” by the authorities is tobacco revenue enhancements. Based on informations from research and development of Ministry of Health Indonesia ( Litbang Depkes ) in twelvemonth 2008, tobacco revenue enhancement rate in Indonesia is placed in five from last place in ASEAN states. As a affair of fact, six coffin nail companies contribute about eighty eight per centum of one hundred per centum Indonesian authorities gross from baccy revenue enhancements ( L.Barbara, et Al ; 2011 ) . These facts shown that monetary value of baccy in Indonesia are rather inexpensive compared to other ASEAN states. However, the two facts presented gives people premise that even though Indonesia has a low revenue enhancement rates ; baccy industry still go one of many beginnings of gross watercourse for authorities.

Increase in baccy revenue enhancements is proven to cut down the ingestion and demand of baccy merchandises ( i.e. coffin nails ) . One research of the World Bank makes a strong statement that 10 percent addition of baccy merchandises will cut down planetary demand about 4 % – 8 % , on norm, and prevent the decease of 10 million people ( ) . As an add-on, Universitas Indonesia behavior about similar research which come up with a decision “ 10 % addition in coffin nails monetary values so it will cut down 17 % ingestion of hapless household ” ( )

Positive consequence on the addition of baccy industry will trip the addition of authorities ‘s gross. A survey from World Health Organization ( WHO ) in 2003 says that 10 % addition in tobacco merchandise monetary value will increase authorities ‘s gross approximately 7 % ( ) .

Finally, using a construct to increase baccy monetary values is non easy and caused several negative impacts on Indonesia. This policy will finally trip the lessening in footings of demand towards baccy merchandises. This is non good as production is about to be reduced and industry may cut their budgets on work force. In any instance, it will diminish the distribution of baccy to the Indonesia Tobacco Industry. Farmers will lose some of their income which could ensue on public assistance of their household. Not merely husbandmans, retail merchants besides might acquire affected on their income.

The good intelligence is the hazard to use an addition in baccy merchandises is non important as it worried by the authorities upfront. This statement is supported by the information which is gathered from analysis of baccy economic system in Indonesia. Data from Ministry of Agricultural ( 2002 ) found out that 900.000 workers are equal to 2,3 % of agricultural workers or 1 % population of 100 % formal workers in Indonesia ( ) . Tobacco harvests are besides seasonal and its plantation is concentrated on several Fieldss in Indonesia. In add-on, Fieldss used to works baccy is less than 1 % of seasonal field harvests which 96 % of it located on Eastern Java, Middle Java, and Nusa Tenggara Barat ( ) .

Badan Pusat Statistik Indonesia stated that baccy industry is ranked at 48 out of 66 sectors mentioning to soaking up of work force in Indonesia. Contribution of baccy industry towards work force soaking up in industrial sectors was drastically diminishing from 28 % in 1970s to less than 6 % and below 1 % of entire work force soaking up from all sectors. The ground behind these statistics is the mechanisation in 1970s. This new engineering allows engineering to be able to replace human in fabricating the coffin nails. The difference, in footings of cost, between fabricating with mechanic and human is approximately 11 % . Therefore, it is logical why baccy industry choose mechanisation fabricating instead than human fabrication. Sum of coffin nails company fluctuated from clip to clip, but distribution supports concentrating in 14 territories geographically during 1960 – 1990. Majority of these coffin nails industry is located on Eastern and Middle Java.

Based on Demographic Institution from Faculty of Economic University of Indonesia ( 2007 ) , increasing baccy revenue enhancements by 100 % will caused deviate household disbursement from coffin nails to other goods and service merchandises about 335 billion rupiah and increasing society income for 492 billion rupiah besides making about 300 1000s work force nationally.

Information which already explained before implicate the positive impact of increasing revenue enhancement rate of baccy is bigger instead than its negative impact. This policy is appropriate for Indonesia as it could perchance impact the addition public assistance degree of its people.

In add-on, the Indonesian authorities is non willing to signA the Framework Convention on Tobacco Control ( FCTC ) orA baccy control convention that has been signedA by 160 countries.A

harmonizing to Seputar Indonesia, baccy industryA in Indonesia believesA that authorities must be moreA concerned withA economicA growing, A includingA revenue enhancement revenueA than theA wellness ofA its people.A

Harmonizing to smallcrab.com, a web site on wellness and etc, states that possibly, the ground why Indonesian authorities is unwilling to increase the revenue enhancement on coffin nail is that the coffin nail revenue enhancement produces big revenueA to the state, it is said that it is about 10 % of the state ‘s revenue.A

Professionals:

The governmentA willA loseA revenueA ifA theyA raiseA taxesA onA the baccy industryA becauseA fewer peopleA willA purchase coffin nails.

Cons:

The evidenceA is clear: A calculationsA showA thatA higher taxesA would indeedA reduceA cigaretteA consumptionA butA does non cut down authorities gross, A rather the opposite.A This couldA occurA because the sum ofA lessening inA coffin nail consumersA is notA comparable with theA sum ofA revenue enhancement increase.A Consumers who areA already addicted toA cigarettesA will usuallyA respond easy toA risingA monetary values ( willA keepA purchasing ) .A Furthermore, A the sum ofA moneyA savedA by thoseA whoA quitA smokingA willA be usedA toA purchaseA other goodsA ( the governmentA willA continueA to receiveA income ) .A Alternatively, raisingA cigaretteA revenue enhancements, A no affair howA high, will neverA do a decrease inA authorities grosss.

3.2 The deductions of Tobacco Industry on Consumers

In this subdivision, we will discourse on the deductions of the baccy industry on Indonesian people particularly consumers. As we know, coffin nails have a bad impact on people whether it is active tobacco users or inactive tobacco users. It deteriorates the wellness of people and doing unsafe disease. However, it is non the lone job ; coffin nails besides have a bad impact on public assistance of people. Harmonizing to a research worker of Demographic Institute Faculty of Economics, University of Indonesia, Abdillah Hasan, he said “ I’veA found theA testimonyA at that place isA aA driverA earningA 50A thousandA a dayA withA fourA kids, two childrenA non go toing schoolA by ground ofA cost.A Strangely, A the driverA wasA able toA spendA money Rp24A thousandA perA dayA toA purchase threeA battalion ofA coffin nails. “ ( ) A This is a immense job to the economic system of Indonesia. Harmonizing to a smallcrab.com, a website about wellness, ingestion ofA cigarettesA is believed toA be oneA of the index ofA poorness in IndonesiaA over the old ages, A it consequences in non onlyA reducedA gross, A reduced monthlyA familyA outgos, it besides leads to decease ( ) .

There are many tobacco users in Indonesia who are addicted to coffin nails. Harmonizing to Khalid, people believe that dependence to coffin nails is so high, raise taxesA coffin nails will non cut down demand for coffin nails. Therefore there is no demand to raise the coffin nail tax.A The fact is raising coffin nail revenue enhancements will cut down the figure of tobacco users andA cut down deceases caused by smoking.A IncreasedA coffin nail monetary values would do some tobacco users to quitA and forestall others to go tobacco users. Cigarette revenue enhancement addition alsoA will cut down the figure of people who resumed smoking andA cut down coffin nail ingestion in people who are stillA

smoking.A Children and striplings are groupsA that are sensitive to cigarette monetary value additions and thereforeA they will cut down the purchase of coffin nails when coffin nail taxesA are raised.A

In add-on, people with low income are besides moreA sensitive to monetary value additions ; hence increasingA coffin nail revenue enhancement would greatly impact the purchase of cigarettesA in developing countries.A

The theoretical account developed by the World Bank in its reportA Controling the Epidemic shows the addition in coffin nail pricesA every bit much as 10 % because of higher coffin nail revenue enhancements will do 40A million people populating in 1995 to discontinue smokingA and prevent at least 10 million baccy deceases.

3.3 The deductions of Tobacco Industry on Tobacco Farmer

The baccy industry has a great impact on people, particularly for its ‘ ain manufacturer, baccy husbandman. SettingA stricter lawA againstA the baccy industryA willA consequence inA occupation lossesA atA the degree ofA baccy farmersA andA cigaretteA makers. HowA oftenA weA hearA thatA 2A million baccy farmersA wouldA lose their jobs.A ThenA 1.5A millionA clove husbandmans, 600,000 workers in coffin nail mills, A 1A millionA peopleA cigaretteA merchandisers, A and 1A millionA workersA on printing, advertisement and transit servicesA alsoA will lose theirA occupations.

However, researchA conductedA byA the WorldA Bank proved the contrary. World Bank demonstratesA thatA inA generalA the countryA willA notA suffer from unemployment if coffin nail consumptionA is reduced.A Some countriesA willA evenA gainA a newA advantageA becauseA consumersA of cigarettesA willA allocateA the moneyA toA buyA other goods and services. This class of action will open up opportunitiesA forA the creative activity ofA new occupations.

4. Analysis

Tobacco revenue enhancements bring both advantages and disadvantages to the state as a whole. As for the Indonesian authorities side, it chooses to derive gross from the baccy revenue enhancements by non raising the revenue enhancement every bit to other ASEAN states. Consumers are non cognizant that coffin nail revenue enhancements ordinance are good merely to the authorities and non to them. As for the husbandmans of baccy revenue enhancements, they are besides enduring for the coffin nail revenue enhancements which are being levied in Indonesia.

4.1 The consequence of Raising Cigarette Tax on Government

Harmonizing to Adioetomo et Al. ( 2001 ) , “ the increasing of revenue enhancement on coffin nails by 10 per centum will diminish the figure of coffin nail consumers by 3 per centums, besides increasing authorities gross from the coffin nail revenue enhancement by 6,7 per centum ” ( Djutaharta, Surya, Pasay, Hendratno, & A ; Moetiningsih, 2005 ) .. It is proven that the increase of revenue enhancements will bring forth more gross to the authorities. It is besides said, harmonizing to the survey from WHO ( World Health Organization ) in 2003 says that 10 % addition in tobacco merchandise monetary value will increase authorities ‘s gross approximately 7 % ( ) .Even though the authorities still increase the revenue enhancement over the old ages, the value of the revenue enhancement is still much lower than other states such as ASEAN states. Harmonizing to chart 1.2, “ ndonesia still has the lowest per centum of coffin nail revenue enhancement comparison to other low income states. “ The norm of revenue enhancement levied on baccy is about 37 % of gross revenues monetary value ” ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) . “ If compared to the planetary benchmark which is 70 % of gross revenues monetary value, Indonesia coffin nail revenue enhancement rate is still low ” ( Barber, Adioetomo, Ahsan, & A ; Setyonaluri ) .

In add-on, Indonesian authorities is non willing to subscribe FCTC ( Framework Convention of Tobacco Control ) which have been signed by more than 160 states ( ) . The FCTC is convention about a pact that addresses coffin nail industry advertizement prohibition and besides the expiration of coffin nail smuggling that is frequently by baccy industries in many states. This proves the statement of WHO stated antecedently that Indonesian authorities is afraid to raise coffin nail revenue enhancement.

Government is loath to increase revenue enhancement as they afraid of the premise of increasing revenue enhancement will take to the lessening of state ‘s gross, while in world it does non cut down their income. However, harmonizing to Khalid, computations shown that higher coffin nail revenue enhancements would non cut down authorities gross ( ) . This might happen because the decrease of coffin nail consumers is non every bit as the sum of revenue enhancement addition. Addicted tobacco users are reacting to monetary value that raise easy. They will maintain purchasing even though the monetary value of coffin nail is increasing. This is clear that the elevation of revenue enhancement would non cut down authorities gross.

4.2 The consequence of Raising Cigarette Tax on Indonesian Peoples

The rise of coffin nail revenue enhancement seemingly brings positive effects on the people in Indonesia. It will impact the figure of tobacco users in Indonesia. As said before, the increasing revenue enhancement of coffin nail by 10 per centum will efficaciously cut down the consumers of coffin nails by 3 percent.Also, one research of the World Bank makes a strong statement that 10 percent addition of baccy merchandises will cut down planetary demand about 4 % – 8 % , on norm, and prevent the decease of 10 million people ( ) . As an add-on, Universitas Indonesia behavior about similar research which come up with a decision “ 10 % addition in coffin nails monetary values so it will cut down 17 % cigarettes ingestion of hapless household ” ( ) . This proves that increasing the revenue enhancement of coffin nail can efficaciously cut down the figure of tobacco users, which means that it can increase the wellness of people in Indonesia.

Besides giving positive impact on wellness, the increase of revenue enhancement could besides take to the increasing of people welfare. Based on Demographic Institution from Faculty of Economic University of Indonesia ( 2007 ) , increasing baccy revenue enhancements by 100 % will caused deviate household disbursement from coffin nails to other goods and service merchandises about 335 billion rupiah and increasing society income for 492 billion rupiah besides making about 300 1000s work force nationally ( ) . Besides, harmonizing to the theoretical account developed by the World Bank in its reportA Controling the Epidemic shows the addition in coffin nail pricesA every bit much as 10 % because of higher coffin nail revenue enhancements will do 40A million people populating in 1995 to discontinue smokingA and prevent at least 10 million baccy deceases ( ) . This proves that the increase of revenue enhancements is non merely increasing the quality of wellness in Indonesia, it is besides increasing public assistance of the people in Indonesia.

4.3 The consequence of Raising Cigarette Tax on Farmer

The obvious impact on raising coffin nail revenue enhancement on husbandman is that some of them will lose their occupation. Cigarette industry will seek to cut costs since the revenue enhancement is increased. By this, some workers such as baccy husbandmans that are antecedently employed will be fired. Harmonizing to Ananta, “ authorities ‘s ground non to increase the revenue enhancement because it will do 2A million baccy farmersA wouldA lose their occupations ” ( Ananta,2010 ) .A ” This will besides causeA 1.5A millionA clove husbandmans, A 600,000A workersA inA cigaretteA mills, A 1A millionA peopleA cigaretteA merchandisers, A and 1A millionA workersA on printing, A advertisement, A and transit servicesA alsoA will lose theirA occupations ” ( Ananta, 2010 ) .

However, this does non go on overnight. Government can expect this and fix for an orderly passage. Datas from Ministry of Agricultural ( 2002 ) found out that 900.000 workers are equal to 2,3 % of agricultural workers or 1 % population of 100 % formal workers in Indonesia ( ) . Tobacco harvests are besides seasonal and its plantation is concentrated on several Fieldss in Indonesia. In add-on, Fieldss used to works baccy is less than 1 % of seasonal field harvests which 96 % of it located on Eastern Java, Middle Java, and Nusa Tenggara Barat. This little per centum of baccy husbandmans among agricultural industry means that the loss of occupations of baccy husbandmans does non truly hold a immense impact on the economic system ( ) . Alternatively some countriesA willA evenA gainA a newA advantageA becauseA consumersA of cigarettesA that have stopped smoking willA allocateA the moneyA toA buyA other goods and services. This class of actionA willA open up opportunitiesA forA the creative activity ofA new occupations. Therefore, it is good for the whole state to increase the coffin nail revenue enhancement.

5. Decision

Based on the analysis that author has conducted, the authorities should increase the coffin nail revenue enhancement in Indonesia. It will assist increasing the wellness of the consumers ; besides it will increase the public assistance of Indonesian people. If the authorities increases the revenue enhancement, it will non impact their gross and they will hold the same sum of income. Besides, baccy husbandmans will acquire a new occupation and do non hold to worry about losing their occupation. Therefore, raising the revenue enhancement of coffin nail will be a win-win solution for the whole people in Indonesia.