Home Business Malaysia: Big Tobacco Says That Cigarette Tax Will Boost Illegal Trade

Business

Malaysia: Big Tobacco Says That Cigarette Tax Will Boost Illegal Trade

As Malaysia sets in place a Sales and Service Tax (SST) on cigarettes, Big Tobacco tries to convince the government against it, by saying that the higher prices will increase contraband activity.

Diane Caruana

September 3, 2018

As of Aug 29th, a 10% tax has been implemented on cigarettes, which will naturally cause existing prices to increase. In response to this, British American Tobacco (M) Bhd (BAT) managing director Erik Stoel, said that the company is concerned that due to the higher prices and the fact that most Malaysians have a below average income, the incidence of contraband cigarette activity will increase.

Recent studies have indicated, that tobacco companies are funding studies that overestimate the levels of tobacco that are smuggled.

“We are concerned that this could further fuel the growth of illegal trade in Malaysia. The legal cigarette industry is under tremendous pressure and has never recovered from the unprecedented excise tax hike of close to 40% way back in November 2015, which increased cigarette prices to the existing high prices compared to illegal cigarettes,” said Stoel in a statement last Friday.

He added that the fact that legal cigarette sales have declined significantly, has made Malaysia a “very attractive hunting ground for smugglers and all sorts of criminal elements that should not be associated with a respectable ‘new Malaysia'”.

“This price increase will result in higher disparity between legal and illegal cigarette prices, in absence of any effective government solutions to curb illegal cigarette trade in Malaysia,” added Stoel.

Recent studies indicate that Big Tobacco is facilitating tobacco smuggling

However, in light of recent findings, one could easily deduct that the tobacco company is trying to overestimate such illegal activities in order to scare local authorities. A press release circulated last week by the University of Bath in the UK, said that two new studies from the University’s Tobacco Control Research Group, have gathered evidence indicating that big tobacco companies are not only facilitating tobacco smuggling, but also doing their best to control the authorities that seek to prevent it.

In addition to this, the studies which were published in the BMJ journal, Tobacco Control, and supported by grants from Cancer Research UK, have also indicated that tobacco companies are funding studies that overestimate the levels of tobacco that are smuggled.

Read Further: The Star Online