Cigarette prices are set to go up at the end of this month or within three weeks, says Health Minister Datuk Seri Dr Dzulkefly Ahmad.
He said the price increase was in line with the recent Sales and Service Tax (SST) implementation on Sept 1.
“The SST will cause the prices of all tobacco products to increase.
“The Health Ministry is in the midst of coordinating the new prices of all tobacco products including cigarettes,” he told reporters at a press conference in Parliament on Tuesday (Oct 16).
On Monday (Oct 15), Dr Dzulkefly had declared the Parliament would be a smoke-free zone with the Health Ministry taking a tougher stance on smoking.
Dr Dzulkefly also said that the minimum age to purchase alcohol had been raised from 18 to 21 effective Tuesday (Oct 16).
Managing director at British American Tabacco (M) Bhd (BAT), Erik Stoel, said the company is concerned about the impact that the 10% SST will have on the cigarette industry, given the high incidence of illegal cigarettes.
He said JTI Malaysia, whose brands are Winston, Mevius and LD, was disappointed that the government had not reverted to the 5% sales tax rate imposed from before the goods and services tax (GST) introduction.
“The introduction of sales tax at 10% for tobacco products in Malaysia translates to a price increase for all our cigarettes brands taking into account the incremental rate differential from the previous GST rates levied on cigarettes,” said O’Rourke in a statement today.
He urged the Government to re-consider an SST increase on tobacco products ‘in light of these high levels of illegal cigarette trade and the persistent pressure on disposable income for the average Malaysia consumer’.
He said in a statement on Friday, August 31,
“For the tobacco industry, a SST of 10% is higher than the previous 6% GST (goods and service tax). Furthermore, this implies a double taxation as the SST will be levied inclusive of high levels of excise, which we currently contribute to the Government.”
Stoel added that this will, unfortunately, leave the company no other choice but to consider an increase in prices for consumers.
“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.”
As a consequence, Stoel said that sales volumes of legal cigarettes have declined significantly and has made Malaysia a “very attractive hunting ground for smugglers and all sorts of criminal elements that should not b 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.”
“Like all Malaysians, we were encouraged by our new government’s manifesto, including clear commitments to address illegal cigarettes and corruption in the system. Based upon this promise, we urge the government to put in place rapid and drastic interventions to address this massive national issue,” said Stoel.