Research conducted by the University of Indonesia's Institute for Economic and Social Research  (LPEM-UI) in 2013 shows that such an excise tax would indeed manage to raise an additional IDR 590 billion (approx. USD $42.1 million) per year (based on a sales volume of 196.6 million liters). However, results of the research also show that the excise tax would lead to a 37.8 percent price hike and a 64.9 percent drop in soft drinks demand, which would then drag down Indonesia's state income from value-added tax and company taxation incomes. As such, the LPEM-UI claims that the move would eventually lead to an annual loss of around IDR 673 billion (approx. USD $48 million).

Entrepreneurs active in Indonesia's soft drinks industry also oppose the government's plan to raise the excise tax on soft drinks. According to them, public health is not at risk as the country's per capita soft drinks consumption is still low at 2.4 milliliter (per person/per day). Moreover, the tax may curb investment in this industry and could cause layoffs.

Indonesia's Ready-to-Drink Beverages Market, 2010-2014:

Drink  2010  2011  2012  2013  2014
Bulk Water  9,864 10,891 13,271 14,160 15,768
Packaged Water  6,388  7,173  8,126  9,020  9,838
Tea  1,194  1,215  1,401  1,780  2,131
Carbonated   515   539   642   869   956
Juice   670   745   861   999  1,169
Isotonic   450   493   526   579   625
Energy   102   106   102   104   103
Coffee    93   102   122   145   194
Milk   414   475   535   604   684
Others    32    36    45    48    57

in million liters
Source: Asrim

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