Increasing ciggie prices will cost you dearly, govt told

 

Police and customs officers have been seizing huge amounts of contraband cigarettes but the difference in prices encourages smuggling. (Bernama pic)

PETALING JAYA: Every 10% increase in tobacco excise duties will cause the government to lose RM254 million in tax leakages, says think tank Datametrics Research and Information Sdn Bhd (DARE).

DARE managing director Pankaj Kumar said according to its “Winning The War On Tobacco Black Market” research paper, the government would lose around RM5 billion in uncollected tax revenue, with illegal businesses getting RM8 billion per year in revenue from illicit tobacco.

He said that when legal tobacco products are highly taxed, it would drive more consumers towards cheaper but illicit alternatives.

“It can also worsen other socioeconomic problems, encouraging systemic corruption across enforcement agencies fuelled by the ill-gotten gains of this trade; deeper criminal penetration into the country’s policymaking bodies; and reducing investor confidence as the rule of law comes under threat.”

Pankaj added that since legal tobacco products were expensive, demand for black market products would increase, and illegal businesses would do what it takes to make profits.

He suggested that the government improve enforcement, maintain an excise moratorium to reduce tax revenue leakages and reduce the price gap between legal and illicit tobacco products.

“Malaysia needs to resolve this issue to generate more funds to fulfil its set targets in the 12th Malaysia Plan.” - FMT