Fiscal Decentralization and Tobacco Control Financing: Evidence from Smoke-Free Policy Implementation in Indonesia

Abstract

ABSTRACT: Tobacco consumption remains a major public health concern globally due to its significant contribution to the burden of non-communicable diseases and associated economic costs. In decentralized governance systems, the effectiveness of tobacco control policies is influenced not only by regulatory frameworks but also by fiscal commitment and institutional capacity at subnational levels. This study aims to examine the relationship between tobacco-related fiscal transfers and the implementation of smoke-free policies across regional governments in Indonesia. A quantitative research design employing panel data analysis was used to evaluate fiscal allocation patterns and policy implementation dynamics during the period 2023–2025. Secondary data were obtained from national fiscal reports, regional budget documents, and administrative policy records. The findings indicate that although tobacco excise revenue transfers increased overall, regional commitment to allocating budgets for smoke-free policy implementation remained uneven. Econometric estimation demonstrates that tobacco revenue transfers and regional tobacco tax income significantly influence policy implementation commitment, while institutional capacity moderates the effectiveness of fiscal resource utilization. These results highlight the importance of strengthening fiscal health governance mechanisms, including performance-based intergovernmental transfers and integrated policy coordination, to ensure that tobacco tax revenues effectively support preventive health interventions and contribute to improved population health outcomes.