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Cigarettes News Last Updated: Jun 2nd, 2008 - 09:23:33


BAT urges Govt to consider gradual hike in cigarette taxes
Jun 2, 2008, 09:19

 
KUANTAN: British American Tobacco (M) Bhd (BAT) is asking the Government to consider a more gradual increase in excise duty on cigarettes in future to discourage the smuggling of illicit cigarettes.

The excise duty on cigarettes rose to 25% last year from 14% in 2004.

Head of business development Azlan Ibrahim said high and sporadic tax increases over past years that had resulted in sharp hikes in the retail price of cigarettes, had forced consumers to buy and hence, create the demand for illicit cigarettes.

“This strong correlation between high tax increases and increased smuggling of illicit cigarettes undermines the Government’s health objectives, adversely affects the tobacco industry and consequently impacts the livelihood of our tobacco farmers,” he told the press at the BAT media retreat last Friday.

He said BAT did not oppose the increases in cigarette taxation but it advocated a moderate tax increase that would be healthy for the industry.

“Ideally, we believe that the tax increase should be about double the percentage of the current inflation rate,” he said.

For instance, he said, if the current inflation rate was at about 3.4%, the tax increase on cigarettes should be at about 7%.

Azlan also said that all government enforcement agencies must continue to intensify their efforts in curbing smuggling activities.

“To date, BAT is satisfied with the hard work of the Customs in foiling many attempts to smuggle illicit cigarettes into the country.

“We would like to thank the Customs and other related agencies for beefing up their enforcement efforts over the years,” he said.

The continued enforcement efforts by Customs led to a decrease in cigarette smuggling rate by 52% to 438 cases in the first five months of this year against the same period last year.

This represented a 58% drop in the value of the smuggled items to RM16.3mil this year.

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