Tax revenue from cigarettes only 0.05% of Labuan’s collection, says Anwar

 

Prime Minister Anwar Ibrahim said cigarettes and tobacco products were taxed to curb revenue loss from illegal trade, especially by those exploiting Labuan’s duty-free status.

PETALING JAYA: Labuan is not solely reliant on the sale of cigarettes and tobacco products for its economy, says Prime Minister Anwar Ibrahim.

Anwar, who is also finance minister, said the tax revenue Labuan collected from the sale of cigarettes constituted only 0.05%.

“In 2020, when cigarettes were still duty-free, the total revenue collected in Labuan was RM241.8 million for all types of taxable goods.

“In 2022, after cigarettes were listed as taxable goods, the total revenue collection in Labuan amounted to RM307.4 million, with tax revenue from cigarettes amounting to RM14,000, representing 0.05% of the total revenue collection,” he said in a written parliamentary reply.

He said that indirectly, these figures indicated that Labuan’s economy was not solely reliant on the sale of cigarettes and tobacco products.

Anwar was responding to Suhaili Abdul Rahman (PN-Labuan), who asked about the possibility of the government reinstating Labuan’s full duty-free status.

Anwar said cigarettes and tobacco products were taxed to curb revenue loss from illegal trade, especially by those exploiting Labuan’s duty-free status.

He also said the government’s decision to revoke the duty-free status for cigarettes, coupled with improved measures to combat smuggling, had notably decreased the incidence of illicit cigarette activities from 63.8% to 55.7% from 2020 to 2023.

On Jan 1, 2021, cigarettes and tobacco products became taxable goods on all duty-free islands, including Labuan, Langkawi, Tioman and Pangkor.

Last Friday, Labuan Chinese Chamber of Commerce (LCCC) president Wong Kii Yii urged the government to restore Labuan’s full duty-free status, adding that its removal had negatively impacted the island.

Wong said reinstating the duty-free status was essential to boost foreign investments, business opportunities and tourism.

He said out of the 200 businesses which were members of the LCCC, approximately 45% were impacted by the revocation of the duty-free status.

He added that many businesses saw a decline in sales and customer numbers by about 10% from 2019 until 2023. - FMT