This study is conducted to identify the transformation of BPHTB tax after diverted into local tax in Kediri City, including the supporting and inhibitors factors involved in the practice. This study used qualitative method, with descriptive approach. The result shows that Kediri has enough preparation in facing diversion of BPHTB into local tax, this can be foreseen from the institutional side, infrastructures and human resources which are well qualified. The supporting factor for BPHTB diversion in Kediri is administration motivation to adjust the regulation to its regional condition, yet there is a lack of human resources quality in collecting BPHTB.

The Minister of Finance Regulation (PMK) No. 146/PMK.010/2017 brings pro and cons in the national economy. The interest of government and industry should be taken into consideration. This paper will explore the impact of PMK implementation to tobacco excise revenue, production volume and industry performance. Minister of Finance Regulation (PMK) No. 146/PMK.010/2017 regarding the simplification of cigarettes tiers. Those policy threatened the sustainability of the Tobacco Industry and national excise revenue. As the strategic industry due to its roles in national revenue, employment creation and its value as industrial heritage in Indonesian history, it needs to be explored. This study aims to analyze the impact of PMK No.146/2017 to the tobacco industry by considering people purchasing power. Simulation model with three different scenarios is used to prevail the effect of the regulation to volume products of tobacco industry. Obtaining more details analyses, Focus Group Discussion (FGD) with the stakeholders, e.g., tobacco association, Ministry of Finance, researcher and journalist have been also conducted. The findings of this study showed, first, simplification of the price tiers of cigarettes will decrease the cigarettes production about 20 percent under lower purchasing power assumption. Second, the simplification will make the tobacco excise revenue fall by 2.4 percent under lower purchasing power assumption. Third, simplifying tiers will increase tobacco excise revenue by 8.5 percent under higher purchasing power. Under strategic industry policy, government policy on tobacco industry should take into consideration some factors such as production volume, national revenue and industry performance. Besides, the government should design others alternative of excise tax objects such as plastic, chlorofluorocarbon/CFC, fuel, luxury goods and sugar products.