Malaysia: Higher tobacco taxes can benefit health, economy

According to the National Health and Morbidity Survey 2019, 21.3 per cent of adults aged 15 and above, or 4.88 million Malaysians, are smokers, with a higher percentage of male smokers.

Malaysia has spent about RM15 billion (1.7 per cent of 2012’s gross domestic product) on tobacco-related healthcare costs. Despite the evidence of significant potential positive equity impact on smoking if tobacco prices are increased via taxation, Malaysia’s last tobacco excise tax rate increase was in 2015.

The benefits of tobacco taxation are threefold.

First, tobacco taxation can reduce smoking prevalence through changes in smoking behaviour. Evidence has shown that increasing cigarette prices would reduce the consumption of cigarettes. In the long term, smokers are more likely to quit smoking.

Second, taxation can correct negative externalities in the tobacco market, like the negative impact of secondhand or even third-hand smoke, loss of workers’ productivity and the burden of associated healthcare costs.

Third, more government revenue can be generated by increasing tobacco taxation.

Therefore, attention should be given to the effectiveness of taxation. The tobacco industry often uses the economic value of tobacco and the claim that raising tobacco taxes will worsen the illicit cigarette trade to create consistent and sustained central messages and themes to lobby or influence the government’s policies on tobacco taxation.

In comparison, tobacco control proponents focus on the value of health. So, it’s time to reframe the issue by combining the health value as well as the perspective of the economy using common economic language.

There should be a uniform cigarette excise tax with regular increases and a significant reduction in the affordability of cigarettes through the pre-announcement of increases in excise tax. This should be done regardless of government changes.

Optimise tax strategies to maximise revenue, reduce cigarette consumption and improve health.

The suggested optimal excise tax rate is RM0.77 per stick, which is a 92.1 per cent increase in the excise tax rate. (Equivalent to 61.8 per cent excise tax of the retail price.) This can generate additional tax revenue of RM771.8 million.

The definitional scope of public health includes multiple determinants of health. The tobacco control movement must, therefore, actively engage others who have convergent concerns on common determinants.

Science does not speak for itself; people must speak for science. Apart from the health sector itself, voices should also come from other sectors, non-governmental organisations and even public opinion through the media.

The government should raise the excise tax for cigarettes. Tobacco taxes denote a triple victory for the government by improving health, reducing associated costs and increasing tax revenues.

Furthermore, in the context of the Covid-19 crisis, the potential additional revenue generated from increasing tobacco excise tax could be used to respond better to the pandemic or support our country’s economic recovery.

Lastly, we would like to echo the slogan that Associate Professor Dr Norashidah Mohamed Nor used during the webinar “Merdeka-kan-lah Diri Anda“. To smokers, free yourself from smoking; to the government, free yourself from the tobacco industry’s interference and save the Malaysian Family from tobacco and smoking products.

Source: New Straits Time