Excise on Sweetened Drinks Cancelled: Entrepreneur Puji Purbaya
Indonesia Cancels Excise Tax on Sweetened Drinks, Citing Economic Concerns
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Jakarta – The Indonesian government has decided to cancel the planned excise tax on packaged sweetened drinks (MBDK), originally slated for implementation in 2026.The decision comes after concerns were raised about the potential negative impact on the economy.
Background: The Proposed MBDK Excise Tax
The Ministry of Finance had proposed the MBDK excise tax as a measure to control sugar consumption for public health reasons and to increase state revenue. The tax was projected to generate IDR 7 trillion (approximately $450 million USD as of December 8, 2023) in revenue. The 2026 state budget (APBN) already included provisions for the excise.
The proposed excise was intended to apply to packaged sweetened beverages, potentially including soft drinks, sweetened teas, and fruit juices with added sugar. Details of the tax rate were not fully finalized before the cancellation.
Industry Response and government Reconsideration
Adhi S. Lukman, General Chair of the Food and Beverage Entrepreneurs Association (Gapmmi), expressed his thankfulness for the Minister of Finance’s decision. He stated that the Minister demonstrated a complete understanding of the issue and its potential economic consequences.
Minister of Finance Purbaya Yudhi Sadewa reportedly expressed optimism about Indonesia’s economic outlook, stating, “We will collect the second half. This means the economy will grow above 6%.” This positive economic forecast appears to have influenced the decision to postpone the excise.
Economic Implications and Future Outlook
The cancellation of the MBDK excise is expected to alleviate concerns within the food and beverage industry, which argued that the tax would increase production costs, reduce sales, and potentially lead to job losses. The industry also suggested that the excise could disproportionately affect lower-income consumers.
While the excise has been cancelled for now, the government may revisit the issue in the future, particularly if economic conditions improve or if public health concerns related to sugar consumption become more pressing. Alternative strategies to address sugar intake, such as public awareness campaigns and nutritional labeling, may also be considered.