JAKARTA, Sept. 13 (Xinhua) -- The Indonesian government will increase the excise tax for cigarettes by an average of 12.2 percent next year as it seeks to boost revenue from the industry and give disincentives to consumers, local media reported here on Tuesday.

In the 2012 state budget draft, the government set total excise revenue at 72.4 trillion rupiah (about 8.4 billion U.S. dollars), a 6.3 percent increase from this year's revised budget of 68.1 trillion rupiah (about 7.9 billion U.S. dollars), said Bambang Brodjonegoro, head of the Finance Ministry's Fiscal Policy Office, on Monday.

Cigarettes will contribute 69 trillion rupiah (about 8 billion U.S. dollars), the lion's share of the excise tax in next year's draft budget. Alcoholic beverages, compact discs, video compact discs and digital video discs will account for the remainder.

The government will allow cigarette makers to produce 268.4 billion pieces next year, despite a long-term plan known as the Tobacco Industry Roadmap which will limit production to 260 billion pieces per year by 2015.

Indonesian cigarette companies produced 252 billion pieces in 2010, and the customs office expects a similar amount this year, the Jakarta Globe reported.

Cigarette excises were increased by an average of five percent this year. Since 2009 the government fixed excise rate per piece instead of using percentage of prices per pack. The rate, however, varies based on cigarette types -- how they are rolled, if they contain cloves -- and the size of a company's production. The more advanced the technology and the bigger production size, the higher the rate.

The plan is subject to approval from the House of Representatives. If approved, it will take effect on Jan. 1, 2012.

Bambang said the government would narrow the excise rate gap among various kinds of cigarettes, a policy aimed to provide disincentives for cigarette companies to take advantage of cheaper volume-based excise rate. The tobacco industry is one of Indonesia 's largest manufacturing sectors and employs millions of people.

Source:Xiong Tong