Think tank urges yearly tax hikes as cigarettes cheaper than essentials

 The Social & Economic Research Initiative says tobacco taxes should be raised consistently to prevent cigarettes becoming more affordable over time.

Cigarette duties were raised to two sen per stick under the 2026 budget, implemented since Nov 1 last year. (Envato Elements pic)

KUALA LUMPUR:

A think tank has called for at least a 5% increase in tobacco taxes yearly after finding that cigarettes in Malaysia have become cheaper in real terms than essential goods despite rising living costs.

According to the Social & Economic Research Initiative (Seri), prices of popular cigarette brands had fallen relative to inflation over the years, even as Malaysians faced rising food prices and broader cost-of-living pressures.

Seri senior researcher Daniel Kittu said tobacco taxes should therefore be increased consistently as a long-term policy measure to prevent cigarettes from becoming more affordable over time.

This will hopefully gradually reduce usage to the point where we can one day abolish tobacco, even through a generational endgame policy that could perhaps be revived in the future.

“That is ultimately a political decision, but as consumption declines over time, such policies become more viable and we can eventually eliminate this harmful product for the sake of public health,” he said at a press conference here today.

The proposal comes after cigarette duties were raised to two sen per stick under the 2026 budget, implemented since Nov 1 last year.

Norashida Nor, an economist from Universiti Putra Malaysia (UPM), also proposed yearly tobacco tax increases, announced in advance to ensure policy consistency across governments and election cycles.

The think tank, in its survey, found that more than 80% of Malaysians supported higher tobacco taxes. It also said the additional revenue could be used to fund healthcare services, smoking cessation programmes, medical screenings and targeted aid initiatives.

Seri projected that tobacco tax revenue could increase from about RM4.4 billion currently to roughly RM5 billion by 2030, depending on consumption trends and enforcement outcomes.

MyWatch president Roslizawati Ali said the “optimal” tobacco tax scenario could eventually raise premium cigarette prices from around RM18 to RM26 per pack of 20 sticks.

Several speakers, including representatives from Seri, UPM, Angkatan Belia Islam Malaysia, and the Malaysia Council of Tobacco Control, rejected claims that higher tobacco taxes were the main driver of the illicit cigarette trade.

Instead, they said smuggling was primarily driven by weak enforcement and corruption, arguing that enforcement measures and tax increases should be implemented concurrently rather than sequentially. - FMT