Brewers foresee loss of tax revenue after alcohol duties go up

The Confederation of Malaysian Brewers Berhad said the 10% increase will further widen the price gap between legitimate and illicit beer.

The brewing industry said higher excise duties are correlated with an increase in the availability of illicit beer. (Reuters pic)

PETALING JAYA:

 Beer and stout brewers foresee a loss of government tax revenue from higher sales of illicit beer after the excise duty on alcohol goes up by 10% in the 2026 budget.

The Confederation of Malaysian Brewers Berhad said the 10% increase will further widen the price gap between legitimate and illicit beer, especially in view of the fact that the country has one of the highest beer excise rates in the world.

Higher beer excise duties are correlated with an increase in the availability of illicit beer, it said.

The confederation said industry estimates show that illicit beer comprises around 25% of beer consumed locally, resulting in an estimated RM1.2 billion loss in tax revenue each year.

“This loss is expected to grow with the increase in excise rates. This will pose a threat to government revenue collection, the industry and consumers.”

The group said the Malaysian brewing industry remains a key contributor to the economy, generating RM7.1 billion a year towards gross domestic product and contributing RM3.3 billion in tax revenue.

The industry also supported over 52,000 jobs across manufacturing, logistics, retail, and hospitality sectors, it said.

In the 2026 budget tabled earlier today, Prime Minister Anwar Ibrahim said excise duties on cigarettes and alcoholic beverages will be raised from Nov 1 as part of efforts to promote a healthier lifestyle.

The brewers’ warning about the effect on black markets is similar to that of the Center for Market Education, a think tank which said last month that when excise duties increase sharply and without warning, it spurred black markets.

Its CEO Carmelo Ferlito noted that in August this year, enforcement agencies uncovered tobacco and liquor smuggling syndicates linked to RM250 million in lost revenues between 2020 and 2024. - FMT