No evidence that taxes cause cigarette smuggling, say experts

PETALING JAYA: A former health ministry official and an economist have slammed a former deputy finance minister’s suggestion that the price of cigarette packs be reduced to RM8 to curb the black market.

Tobacco control expert Dr Zarihah Mohd Zain, who helped draw up smoking regulations in Malaysia, said lawmakers should rely on the scientific evidence before making any decision on tobacco taxes to combat illegal smuggling.

“What guarantee is there that RM8 per pack could solve the black market problem? Are there any studies to back up this suggestion?” she said, urging the government to provide a justification for the

Recently, Pontian MP Ahmad Maslan said that the government can conduct a two-year pilot programme for cigarettes to be sold at RM8 a packet, the same price as smuggled cigarettes.

Ahmad Maslan said 64% of cigarettes sold in Malaysia were illegal stocks, while only 36% were taxed, causing a RM5 billion annual loss in tobacco tax revenue.

However Zarihah said the claim that higher tobacco taxes may exacerbate illicit smuggling was not supported by any evidence.

Further, she said the tobacco industry used this threat in many countries to scare the government and to avoid any raise in taxes.

Goh Lim Thye, a senior economics lecturer at Universiti Malaya, concurred. He said raising tobacco taxes is not the primary cause of illicit trade.

“Non-price factors such as governance status, weak regulatory framework, and the availability of informal distribution networks appear to be far more critical factors,” he said.

Goh said the black market was relatively larger in countries with low taxes and prices, and somewhat smaller in countries with higher cigarette taxes and prices

The risk of reducing cigarette prices was that it may encourage higher consumption.

A national health morbidity survey in 2015 had shown that about 5 million or 22.8% of Malaysians aged 15 and above were smokers and the smoking-related deaths accounted for about 20% of all deaths annually.

Further, he said, more than 15% of hospitalisations were a result of smoking-related illness.

He proposed that the government tighten enforcement and impose severe punishment for smugglers such as mandatory imprisonment. “Another effective way is to educate the public to stop smoking. There would be no smuggling activities if there is no demand,” he added.