Malaysia on Wednesday has increased cigarette taxes by over 40 %, a step which British American Tobacco Malaysia (BAT Malaysia) explained as an “unprecedented huge boost in cigarette excise”.
In a report, BAT Malaysia explained it had to boost prices of its brands, which include brands like Dunhill, Lucky Strike and Benson & Hedges, after “considering the sum required by the excise boost and its effect on GST and inflationary cost constraints”.
“The tobacco industry has by now been affected by an enormous 12 % raise in cigarette excise only a year ago on November 1, 2014,” stated Stefano Clini, Managing Director of BAT Malaysia. “This was accompanied by the setup of the Goods and Services Tax (GST) at 6 % on April 1 this year.” He also added: “The legal tobacco market has decreased by 10 % on a September year-to-date basis. This excessive rise in cigarette excise carried out against the backdrop of both vulnerable economy and consumer emotions will certainly power further an already large level of illegal cigarettes, where 1 in 3 packages is illegal. “We are not able to imagine the effect that this greater than 40 % boost in excise will have on the industry.”
The new range of prices of BAT Malaysia’s cigarette brands will constitute between RM15.50 (US$3.64) and RM18.