Tobacco firm blames illegal cigarettes boom on government policies

 

The sale of illegal cigarettes in Malaysia is the highest in the world with contraband cigarettes comprising 62.3% of total sales last year.

PETALING JAYA: A tobacco company today highlighted the various factors contributing to Malaysia’s thriving illegal cigarette trade, with taxation and regulatory policies on top of the list.

Speaking at the Global Tobacco & Nicotine Forum today, JTI Malaysia managing director Cormac O’Rourke said Malaysia was the world’s largest consumer of illegal cigarettes – and the 12 billion sticks sold last year amounted to around RM5 billion in uncollected tax revenue.

“Malaysia is a case study of what can go wrong, (and) how ill-conceived taxation and regulatory policies create a perfect opportunity for illegal cigarettes to boom,” he told a press conference over the online webinar.

“Excessively high excise-led price increases created a wide price gap between legal and illegal cigarettes. The price of legal cigarettes in Malaysia is the third highest in this region – making the country a natural target for smugglers,” he said.

Cormac O’Rourke.

O’Rourke noted that despite the vast difference in price between legal and illegal cigarettes, tax reductions would not address the problem of illegal cigarettes.

The government introduced a 40% excise tax increase on tobacco in late 2015, which pushed even more smokers to the black market.

Calling for a stable tax environment and an excise tax moratorium, O’Rourke also suggested a policy environment that addressed the illegal trade and a ban on transhipped cigarettes as solutions to the problem.

With contraband cigarettes comprising 62.3% of total sales in 2019, the highest in the world, O’Rourke stressed that enforcement must be a priority in the battle against illegal cigarettes. - FMT