Crowding-out effect of tobacco consumption in Indonesia.

BACKGROUND: Tobacco consumption is pervasive in Indonesia, with 6 out of 10 households in the country consuming tobacco. Smoking households, on average, divert a significant share (10.7%) of their monthly budget on tobacco products, which is higher than spending on staples, meat or vegetables. Nevertheless, evidence of the causal link between tobacco expenditure and spending on other commodities in Indonesia is limited. OBJECTIVE: This study aims to estimate the crowding-out effects of tobacco spending on the expenditure of other goods and services in Indonesia. METHOD: This research estimates the conditional Engel curve with three-stage least square regression, where the instrumental variable technique is applied to address the simultaneity of tobacco and total non-tobacco spending. The study employs a large-scale household budget survey from the Indonesian socioeconomic survey (Susenas) from 2017 to 2019, comprising over 900 000 households. FINDING: Tobacco spending crowds out the share of a household's budget allocated for food, such as spending on staples, meat, dairy, vegetables and fruits. Moreover, tobacco spending also reduces the share of expenditure spent on non-food commodities, such as clothing, housing, utilities, durable and non-durable goods, education, healthcare and entertainment, although its effect is not as large as the crowding out on food. The analysis shows that the crowding-out effects of tobacco are observed across low-income, middle-income and high-income households. In addition, the simulation suggests that reducing tobacco expenditure will increase household spending on essential needs.

The advocacy coalition of sugar-sweetened beverage taxes in Indonesia.

The Ministry of Finance of Indonesia has put sugar-sweetened beverages (SSBs) taxation on its agenda since 2020 to address the need for health financing, as outlined in the National Medium-Term Development Plan for 2020-2024. However, the adoption process of this fiscal policy has been slow. This study aims to generate insights into the actors involved in the discourse of SSB tax adoption in Indonesia to inform their advocacy and communication efforts using the Advocacy Coalition Framework and Discourse Network Analysis. The analysis was conducted using data extracted from 1733 statements collected from 200 online web domains and subdomains, divided into three timeframes of the policy process. The analysis identified actors supporting and opposing the adoption of SSB tax. The discourse network also identified key advocacy coalitions and organisations in the discussion on SSB tax adoption in Indonesia. The results indicate that there are diverse network patterns in each timeframe and reveal the process and focus of the policy change. The Ministry of Finance had the most significant influence on the discourse, with actors from civil society organisations and universities involved in the process of policy change through evidence-based policy recommendations. Meanwhile, economic actors contributed to the debate on the potential harm of tax adoption to the industry. These findings can inform the policy process and ensure the successful adoption of the SSB tax in Indonesia.

Macroeconomic impact of tobacco taxation in Indonesia.

BACKGROUND: A significant tobacco tax increase has long been advocated to reduce Indonesia's high smoking prevalence. However, implementing such a policy remains challenging due to the tobacco industry's argument that it would negatively impact the economy. OBJECTIVE: This study aims to provide a comprehensive estimate of the net impact of tobacco taxation on Indonesia's economy. METHOD: The impact of the tax hike on the economy is simulated through a change in cigarette demand and reallocation of household's budget and allocation government spending from additional tobacco tax revenue. Input-output analysis is employed to estimate the net effect of the tobacco tax rise on the total economic output, income and employment in Indonesia. FINDING: Increasing the tobacco tax would generate a net positive impact on the economy as it would increase economic output, household income and employment. The positive impact is mainly driven by government spending from additional revenue from increased tobacco taxes. Spending tax revenue using the current structure of government spending has the potential to generate the optimal economic effect. Increasing tobacco tax by 45% from the 2019 tax level would increase economic output, household income and employment by Rp84.2 trillion, Rp24.1 trillion and 400.3 thousand jobs, respectively.

The 2019 economic cost of smoking-attributable diseases in Indonesia.

BACKGROUND: In 2019, ever-smoking prevalence among adults in Indonesia was 32.8%, which may correlate with a high burden on the economy. Therefore, there is an urgent need to estimate the economic costs of tobacco use, which are crucial for policymakers in planning healthcare provisions and other public expenditures. METHODS: We follow the WHO standard approach, multiplying the sum of the direct and indirect costs with the smoking-attributable fraction. Direct costs include healthcare and non-healthcare costs. Indirect costs include the loss of productivity resulting from absence from work and premature death due to smoking-related illnesses. FINDINGS: We found that the 2019 economic cost of smoking ranges from Rp 184.36 trillion to Rp 410.76 trillion (1.16%-2.59% of the gross domestic product). This research found a similar economic cost of smoking compared with a previous estimate conducted by Kosen et al of Rp 438.5 trillion. However, the estimated direct cost of smoking ranges from Rp 17.9 trillion to Rp 27.7 trillion, which is higher than the estimate of Rp 15.5 trillion by Kosen et al. Badan Penyelenggara Jaminan Sosial Kesehatan allocated between Rp 10.4 trillion and Rp 15.6 trillion to cover the healthcare costs attributable to smoking, representing between 61.2% and 91.8% of the 2019 deficit. CONCLUSIONS: The vast economic cost of smoking is a waste of resources and a burden on Indonesia's National Health Insurance System. Therefore, the government must increase cigarette taxes to correct the negative externalities of smoking consumption.