The Malaysian government has announced that it will impose higher excise taxes starting on November 1 as part of broader efforts to promote a healthier lifestyle.
Prime Minister Datuk Seri Anwar Ibrahim said the excise duty on cigarettes will increase by two sen per stick, while taxes on cigars, cheroots, and cigarillos will rise by MYR40 per kilogramme.
He also said the price of heated tobacco products will increase by MYR20 per kg, while the excise duty on alcoholic beverages will rise by 10%, Free Malaysia Today reported.
At the same time, the government will extend import duty and sales tax exemptions on Nicotine Replacement Therapy (NRT) products such as nicotine sprays and lozenges until December 31, 2027.
Anwar said that the additional revenue generated from the increased duties will be used to fund several health-related campaigns and treatment programmes led by the Ministry of Health and other relevant agencies.
“Additional revenue from (the excise duties of) cigarettes and alcoholic beverages will be distributed to the Ministry of Health, among other things, for the ministry’s lung health initiative, as well as for the treatment of diabetes and heart disease,” he said, as quoted by Channel News Asia.
He expressed optimism that these significant moves will help smokers and alcohol drinkers limit their tobacco and alcohol intake and support their transition to safer alternatives.
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Anwar committed to healthier lifestyle
Anwar added that this decision reflects the government’s unwavering commitment to promoting a healthier lifestyle and reducing the number of individuals suffering from lung-related illnesses in the future.
However, the Confederation of Malaysian Brewers Berhad (CMBB) warned that the government’s decision to impose a 10% excise duty on alcohol will only fuel illicit alcohol trade, undermine legitimate businesses and result in significant revenue loss.
“This will pose a threat to government revenue collection, the industry and consumers. Higher beer excise duties are correlated with an increase in the availability of illicit beer,” CMBB said.
Brewers estimated that about 25% of beer consumed locally is illicit, leading to an estimated MYR1.2 billion loss in tax revenue annually before the planned excise duty hike.
The brewing sector is one of the key contributors to Malaysia’s economy, generating MYR7.1 billion per year and contributing MYR3.3 billion in tax revenue while supporting more than 52,000 jobs across various sectors.
Carlsberg Brewery Malaysia Bhd and Heineken Malaysia Bhd – two brewers in the country – also shared similar sentiments, warning that unlawful trade poses health risks since contraband products have no regulatory oversight.
Apart from the brewery industry, the Malaysia Singapore Coffee Shop Proprietors’ General Association (MSCPGA) said that this move may weaken the country’s dining and tourism markets since Malaysia already has one of the highest alcohol taxes in the world.
Calls for stronger enforcement against illicit trade
Given these concerns, the brewery sector and the MSCPGA called on the government to further strengthen enforcement and market control to prevent illicit trade instead of increasing alcohol taxes.
The brewery industry also pledged to support the government in its ongoing efforts to eradicate illicit beer trade and protect government revenue from losses.
They expressed optimism that co-operation between the sector and the government will result in a more balanced and collaborative approach that effectively addresses their growing concerns.
As the clock ticks toward the enforcement of the new excise duty hike, the federal government must now strike a balance in safeguarding public health without hurting key sectors and the economy.
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