e-liquid began to impose consumption tax

The levying of high consumption taxes on tobacco is common in many countries. The high consumption tax on tobacco has become a large part of the government's revenue, which must be met by the majority of smokers. However, electronic cigarettes have become popular in recent years. Many smokers have abandoned cigarettes and have begun to smoke electronic cigarettes. As a result, the sales of cigarettes have continued to decrease, which has directly affected government revenue. Therefore, some national governments began to great e-liquid.

Vapes are made up of two parts. One is a smoking article. The smoking article is generally composed of plastic parts, hardware and electronics. If a high consumption tax is levied on smoking articles, it seems to be impracticable because he is only an electronic product. Another component of vapes is e-liquid. e-liquid is a chemical product. Its composition is diverse and uncertain. Many e-liquids contain nicotine, tar, tobacco and other substances. Therefore, e-liquid is levied on e-liquid. Consumption tax can be based on evidence.

At the beginning of this year, the Indonesian government said that it would impose a consumption tax on e-liquid. However, no specific time was announced at that time. It only stated that it began in the summer of 2018. However, specific time has already been announced.

According to Reuters, Sunaryo, the Indonesian customs and cargo tax official, said that the country will begin to impose a 57% consumption tax on e-liquid from July 1. Sunaryo said that the new excise tax applies only to e-liquid so that “the consumer can get more protection”.

Indonesia's consumption tax mainly comes from tobacco, which is an important source of government revenue. The excise tax on steam smoke is an extension of the current excise tax on tobacco products.

As an important producer and exporter of cigarettes and cigars, Indonesia sells its tobacco products to other countries. At the same time, they are also the countries with the highest smoking rates in the world. Tobacco advertisements are widely seen in Indonesia. Despite the decline in global tobacco sales, it is still growing. However, there was a decline in sales for the first time in 2017.

The culprit that caused the decline in Indonesia's tobacco sales in 2017 was the electronic cigarette. Therefore, the Indonesian government began to formulate the e-liquid excise tax scheme. It is obvious that the real reason behind this is that the government's tax revenue has decreased.

In 2016, the sales revenue of Indonesia's vapes has increased nearly 5 times to 321 billion Indonesian rupiahs. The General Administration of Customs estimates that Indonesia currently has approximately 300 unregulated e-liquid manufacturers that will wholesale and sell a variety of e-liquid products to physical stores and consumers throughout the country.

This time, Indonesia’s levying of a high consumption tax on e-liquid should be the beginning. Slowly it will affect the global, high taxes and the shrinking tobacco industry. The governments of other countries cannot remain unmoved.

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