Excise Duty on Tobacco: An Economic Deterrent to Smoking

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From economic prospect, hike in excise duty on tobacco is an effective way to stop smoking (Stapp, 2015). Excise duty is tax that are levied on certain goods such as liquor and cigarettes when they are imported into or manufactured in Malaysia. There are two kind of excise duty, ad valorem and specific. Ad valorem excise taxes are charged as a percentage of the value of tobacco product while specific excise taxes are a fixed amount being taxed on the tobacco product (Investopedia, 2017). The taxes on tobacco in Malaysia is accessed upon their weight until 2004. Malaysia has introduced specific excise tax on tobacco in 2005 which is easier to supervised because it only needs to count by stick. This has corresponded with the canon of simplicity …show more content…

This may be due to the availability substitutes good likes illegal cigarettes. After Deputy Health Minister Datuk Seri Hilmi Yahaya announced that he is planning to increase the tobacco tax, there are many people stated that most of the smokers may change to illegal cigarettes which are more dangerous and harmful than legal cigarettes (Dr Saunthari Somasundaram, 2017). The hike in excise duty on tobacco leds the price of cigarettes increase of between 23% to 26% for each cigarette pack. This makes the sales volume of legal cigarette dropped and sales volume of illegal cigarette has been driven up. Some of the smokers may change to cheaper illegal cigarettes as the retail price is much different between legal and illegal cigarettes which is RM17 for legal cigarettes pack compared to RM3 for illegal pack (Adeline Paul Raj, 2016). Independent studies conducted that over 50% of illegal cigarettes are consumed in the country. There are about 8 millions of illegal cigarettes were coming to Malaysia each year. A continuous rise in excise tax on tobacco in Malaysia from 2012 to 2014, illustrated a decrease in legal cigarettes consumption, but the illegal cigarettes consumption still at the same level (Tharanya Arumugam, 2017). But most of the people still believed that increased in excise …show more content…

Therefore, government has to find out a faster way to reduce the quantity of people smoking effectively. According to the statistics above, the cost of healthcare projects for 3 smoking-related diseases is expanding from 2004 to 2010 (SEATCA, 2013). Government Malaysia also put other efforts to reduce the quantity of smokers by education, multimedia, campaigns and so on. The first activity that Malaysian government held was anti smoking campaign in 1991. This campaign has been ran for over 10 years to grab the attention and spread the awareness of the hazards of smoking to the general public. Although this campaign was launched, but the smoking rate still rising. Then, the health ministry has launched ‘Tak Nak’ media campaigns towards both smokers and non-smokers from 2004 until 2010. The ‘Tak Nak’ media campaigns has raised the awareness of the effects of smoking and stop people from smoking or starting to smoke through media such as radio, TV (advertising) and outdoor included notice boards and banner. In addition, the regulations of posting gruesome photos on cigarettes packs also set by the governments in 2009 to encourage smokers to quit smoking. The photos showed the consequences of smoking such as lung cancer, badly stained teeth, neck cancer (Tan,

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