Increase excise tax on tobacco products

HEALTH Minister Dr Dzulkefly Ahmad in his inaugural speech on World No Tobacco Day on May 31 said prevention and promotion of health will be among the cornerstones for tackling Malaysia's health "epidemic" of non-communicable diseases such as cancer, diabetes and hypertension by addressing its core risk factors such as smoking.
National Cancer Society of Malaysia welcomes the clear message and direction. Along with other health civil society organisations, we were even more elated to read that the minister briefed journalists that the ministry is working on a draft of the Control of Tobacco Product and Smoking Act and that the government will maintain the price of tobacco and tobacco products despite the zero-rating of the GST.
We applaud this move to maintain the prices of tobacco products but recommend strongly that this be done via an increase of excise tax, instead of merely letting these additional monies go to the cigarette companies.
Excise tax for cigarettes, tobacco and tobacco products have not been raised in Malaysia since November 2015. There is still much room for increase, especially since under the World Health Organisation Framework Convention on Tobacco Control (FCTC) which Malaysia signed in 2003 and enforced from 2005; one target is that tobacco tax should constitute 75% of the cigarette price. We have yet to achieve this target.
We put forward three reasons as to why an increase in excise tax is a win-win situation for all Malaysians.
First, overwhelming evidence continues to point to taxation as one of the most effective methods to deter smoking. Increase in cigarette prices reduces consumption by smokers, encourages people to quit smoking and is a strong deterrent against people starting smoking at all.
Second, an increase in excise tax now to maintain cigarette retail prices can further be complemented by an increase in the sales and services tax when it is implemented. This will further move Malaysia along the goal of implementing FCTC targets as well as to act as a further deterrent to the smoking community.
Finally and most importantly, an increase in excise tax amounts to an increase in government revenue, and not an insignificant one at that. The World Bank, estimated that just a 10% increase in cigarette tax would lead to an increase of 7% in government revenue (the current revenue from cigarette tax is slightly above RM 1 billion). Especially in these trying times, this important additional source of revenue could be of great use for the government while also (happily) allowing the government to do the best for the rakyat.
We thank the government for helming the fight for the cause of "no-tobacco" and strongly support the move on making the one product we don't want getting cheaper after GST-0% – cigarettes.
Dr Murallitharan M.
Public Health Physician and Director
National Cancer Society Malaysia