Tax on tobacco products will cause negative multiplier effect - group

 

The proposed excise tax on all cigarette and tobacco products in duty-free areas will cause a negative multiplier effect on the Malaysian economy, said duty-free retailing group The Zon Duty Free.

Director Ong Bok Siong said the move by the government would not only impact the revenue of retailers but may also discourage tourists to visit what will be semi duty-free zones; threaten jobs that are needed by predominantly B40 communities and de-incentivise foreign and local investments into these areas.

"Clearly, it is the wrong time to impose excise duty on cigarette and tobacco products in duty-free areas. These products are very popular with international and domestic travellers and form a significant part of a duty-free retailer’s revenue,” Ong said in a statement today.

The Zon is a member of Atlan Holdings Bhd group of companies, one of the largest duty-free retailing groups in Malaysia.

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

Ong said if the industry’s revenue stream is pressured even further, some duty-free retailers may be forced to reduce their workforce or close altogether.

“Surely this outcome is misaligned with the federal government’s aim to reinvigorate the economy that has been hurt by the crisis.

“The focus now should be to assist businesses to get back on their feet so they can, in turn, contribute positively to rebuilding our economy,” Ong added.

- Bernama