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Cigarettes account for about 97 percent of the government's receipts from excise duty, which amounted to 38 trillion rupiah in 2006.

JAKARTA - Legislation passed by the lower house of parliament will allow the government to increase the maximum excise duty it can levy on cigarettes to 57 percent from 55 percent, although the government's wanted the maximum increased to 65 percent, a member of parliament said Monday.

'The new law shows there is a political will to protect the industry,' said the lawmaker, Irmadi Lubis, who chairs the parliamentary committee that deliberated on the bill.

'The tax rate proposed by the government was too high. It could kill the industry,' he said.

The lower house passed the bill Friday.

Cigarettes account for about 97 percent of the government's receipts from excise duty, which amounted to 38 trillion rupiah in 2006.

The government normally sets the minimum retail prices for cigarettes as the base for calculating the excise duty. At present, the highest duty it charges on machine-rolled cigarettes is 40 percent.

So far, the duty has been levied on certain products in order to reduce consumption and to control the distribution of such products. Lubis said the new legislation said that duty should also be levied if the consumption of such products could pollute the environment.