PETALING JAYA: A multiyear tax calendar, combined with stronger enforcement measures, could strike a better balance between curbing smoking and addressing the growing illicit tobacco trade.
University Kebangsaan Malaysia (UKM) public health medicine specialist Professor Dr Sharifa Ezat Wan Puteh said the absence of a tobacco tax increase in Malaysia’s 2025 Budget has sparked debate about missed opportunities in public health and economic sustainability.
She noted that Malaysia’s stagnant tobacco tax rates, unchanged since 2018, leave a gap in the fight against smoking-related health costs and the illicit market.
“Malaysia spends RM6.1 billion annually on treating tobacco-related illnesses while generating only RM3 billion in tobacco tax revenue.
“The economic losses from the illicit tobacco trade are equally alarming, amounting to approximately RM5.1 billion annually,” Sharifa said in an exclusive interview with SunBiz.
She emphasised that higher taxes are a proven deterrent to smoking but warned that without combating illegal trade, higher taxes could inadvertently boost the illicit market.
Sharifa highlighted that a multiyear tobacco tax calendar, which involves gradual tax increases over several years, could help reduce smoking rates while mitigating negative economic impacts.
“This approach would allow businesses and consumers to adjust to rising costs, avoiding sharp price hikes that drive consumers toward untaxed and unregulated products.
“A gradual tax increase for tobacco is good as long as the illicit market can be stamped out. Failure to do so would actually have the reverse effect,” she said.
She noted that a gradual tax plan must be accompanied by robust enforcement measures, such as improved border controls and harsher penalties for smugglers to maximise effectiveness.
“These steps are critical to reducing the availability of illicit tobacco products, which undermine legitimate businesses and public health efforts,” added Sharifa.
She recommended that Sweden’s success in reducing smoking rates to under 5% provides a valuable roadmap. The country implemented gradual tax hikes alongside public health campaigns, cessation programs, and regulated alternatives like Snus.
“This comprehensive approach not only decreased smoking prevalence but also led to lower rates of cardiovascular disease and lung cancer.
“In Sweden, nicotine use continues through alternatives like Snus, yet they have achieved some of the lowest rates of tobacco-related diseases,” she noted, adding that Malaysia could adopt similar strategies, combining predictable tax increases with education and smoking cessation support.
Beyond taxation, Sharifa remarked that Malaysia’s tobacco control strategy must integrate public education, cessation programs, and enforcement against illegal sales.
“Smoking bans in public spaces, while beneficial, do not address the root causes of smoking or the allure of the black market.
“A multiyear tobacco tax calendar could serve as the cornerstone of a broader strategy,” she said.
She noted that by gradually increasing taxes and strengthening enforcement, the government can reduce tobacco consumption, minimise the economic burden of smoking-related diseases, and combat the illicit market effectively.
“This sustainable, balanced approach could deliver both economic and public health gains while supporting businesses and preventing a backlash from consumers,” added Sharifa.
