‘Rise in tobacco tax will lead to higher use of illegal ciggies’ (updated)

  • Nation
  • Tuesday, 22 Oct 2019

PETALING JAYA: Tobacco companies contend that increasing excise taxes could lead to increased consumption of illegal cigarettes.

JT International managing director Cormac O'Rourke said as such, any further excise duty increase should not be considered for now.

"Under the law, the full quantum of any excise increase must be passed on to the consumer.

"In 2015, that resulted in the average weighted price of a cigarette pack jumping by over 20%.

"Illegal cigarettes already accounted for over 30% of the market in 2015, but the further sharp excise price increase drove that number to where we are today with over 60% of total cigarettes consumed being illegal," he said when contacted.

O'Rourke added that Malaysia is the fourth least affordable country globally for consumers to purchase legal cigarettes.

"The price of a legitimate pack of a premium brand of cigarettes is RM17.40, which is almost six times higher than an illegal pack at RM3," he said.

He urged the Government to impose a two-year moratorium on tobacco excise increases to allow time for a clampdown on illicit cigarette sales.

British American Tobacco (M) Bhd (BAT) managing director Erik Stoel said the Government should train its sights on those in the illegal cigarette trade instead.

"For households in the B40 category, the daily income required to purchase a pack of legal cigarettes was over 17% (of mean household daily income).

"Contraband cigarettes however only account for 4.8% of the daily income. Simply put, it all boils down to affordability," he said.

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