Cigarette tax in duty-free areas counter-productive - Langkawi hotel rep

 

Placing excise tax on cigarettes will likely deprive budget hotel proprietors and retailers operating in duty-free zones an important source of income, and thus be a counter-productive move, says the Malaysia Budget Hotel Association's Langkawi Chapter.

As such, the hospitality industry body is urging the Malaysian government to reconsider its proposal to impose taxes on cigarettes and tobacco products sold in all duty-free islands.

The chairperson of MyBHA (Langkawi Chapter), Noorazly Rosly, said in a statement today: “Most of our members have retail outlets or convenience stores operating within their properties.

"By imposing tax on popular consumables, sales volume and revenue will surely drop.

“Budget hotel operators are already pushed to near closure as a result of the global Covid-19 pandemic. Every single source of direct and indirect revenue is precious.

“It is our hope that the government will not impose a tax that will add to their hardship, but instead introduce initiatives that will help our members survive this ordeal and eventually, contribute to the economic growth of duty-free islands.”

In his recent Budget 2021 speech, Finance Minister Tengku Zafrul Abdul Aziz said that taxes would be imposed on cigarettes and tobacco products on all duty-free islands and any free zones that have been permitted retail sales of duty-free cigarettes.

Noorazly expressed his concern that making cigarettes more expensive may incentivise criminal syndicates to bring in contraband cigarettes that target both locals and tourists.

Illegal cigarettes have never been a significant problem in duty-free islands like Langkawi, he said.

“Why would one buy contraband products when the legal products cost the same?”

“Imposing a tax on cigarettes in these islands means creating an entirely new and virgin market for the illegal cigarettes syndicate. Given the current, challenging operating landscape, we cannot afford to lose tourist arrivals because of unwholesome perception and experience,” Noorazly added. - Mkini