Cigarette tax: is it an answer for Indonesia’s national health insurance deficit?

Author: Sukma Lestari

Lestari, Sukma, 2020 Cigarette tax: is it an answer for Indonesia’s national health insurance deficit? , Flinders University, College of Business, Government and Law

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The Indonesian national health insurance or Jaminan Kesehatan Nasional, known as JKN, has experienced a deficit since the first-year implementation. Consequently, if the deficit is allowed to continue, the Indonesian public health system is likely to collapse. Therefore, in 2018, the Indonesian government promulgated a policy to allocate 37.5% cigarette tax revenue earmarking as one alternative to resolve the deficit. This study aims to perceive the effectiveness of this policy by addressing several queries: why utilise cigarette tax for resolving the deficit? how does it work? and can it support the deficit settlement? The analysis is based on the references from primary and secondary data, documents, and regulations, combined with the review of preliminary studies and other related literature. Finally, this study reveals that the utilisation of a cigarette tax revenue portion is insufficient for covering the deficit, and the government should seek other options to supplement this policy. However, the deficit has a positive impact; the national health insurance membership coverage is broader than in previous years.

Keywords: deficit JKN, cigarette tax, cross-subsidising, central and local governments

Subject: Policy and Administration thesis

Thesis type: Masters
Completed: 2020
School: College of Business, Government and Law
Supervisor: Dr Zhibin Zhang