KUALA LUMPUR: The Confederation of Malaysian Tobacco Manufacturers (CMTM) hopes for a gradual and moderate increase in excise duty in the coming Budget 2014 to avoid a spike in illicit cigarette incidence.
Shahrul Azamin Abdullah, the chief executive of CMTM, said the illegal cigarettes trade recorded a slight downward trend in 2011 and 2012, as there were no announcement of tax increase during the period.
“As an industry association, we understand the needs of the government and we propose to the government please increase it (excise duty) in a moderate, gradual and predictable manner.
“A drastic increase in excise tax will augment the growth of illegal cigarettes,” he told the media in a briefing of Illicit Cigarette Study (ICS) held here yesterday.
Shahrul sees a high possibility of excise tax increase in the upcoming Budget 2014.
The ICS findings showed illegal incidence has been trending downward to 33.6 per cent between March and May 2013, from 37.5 per cent in year 2009.
However, this is still considered as an alarming level and illegal cigarette trade is still rampant, he said.
Smugglers imported illegal cigarettes mainly from Indonesia, Thailand, the Philippines, Cambodia and China. Some of the popular illegal cigarette brands for instance Gudang Garam, John, Canyon, Era and League, were sold to the public from as low as RM3 per pack, far below the mandated minimum selling price of RM7 per pack.
Meanwhile, the volume of legal cigarettes has decreased by 6.1 per cent to 14.1 billion sticks last year from 20.2 billion in year 2003. There were close to 8 billion sticks of illegal cigarettes consumed by smokers last year, translating to a whopping growth of 46 per cent in last 10 years.
CMTM estimated that the government incurred a losses of RM2 billion annually from unpaid duties by illegal cigarettes.
In the meantime, the huge profit gained from illegal cigarettes trade were used to fund syndicated crime, he added.