THE Malaysian Council for Tobacco Control (MCTC) lauds the government over its Budget 2021 tabled by Finance Minister Datuk Seri Tengku Zafrul Tengku Abdul Aziz on Friday.
The Budget has made available many important allocations and assistance measures for all Malaysians at different levels that will aid us as a nation in overcoming these difficult times as we grapple with the Covid-19 pandemic.
However, in terms of tobacco control efforts, the Budget has some serious shortcomings that we, MCTC, as the umbrella body for tobacco control, are deeply concerned about.
These concerns are specifically on the areas of electronic/non-electronic cigarettes, including vape and conventional cigarettes. This media statement will specifically cover concerns pertaining to the former issue.
In the Budget, the Finance Ministry plans to increase the sustainability of government revenue via additional taxation on certain tobacco-related products.
The ministry plans to:
i) Impose an excise duty of 10% on devices for all types of electronic and non-electronic cigarettes, including vape; and,
ii) Impose an excise duty at a rate of RM0.40/ml for all liquids used in electronic cigarettes.
Superficially, these are efforts that seem laudable as they are in line with known strategies to tax “sin” products in order to reduce their use. However, there are serious shortcomings with these strategies that MCTC would like to highlight.
What may have been overlooked by the ministry are as follows:
i) In 2016, the cabinet at the time decided to regulate electronic cigarettes/vape, putting three ministries in charge of overseeing this. Despite some positive updates, including the development of standards for batteries, devices and the packaging of electronic and non-electronic cigarettes that do not contain nicotine, sellers remain unlicensed and in huge numbers. This is because there has been no direction provided.
Without a registry of licensed sellers, there will be no viable collection mechanism to actually collect this revenue in a significant manner, ever. Thus, a lot of work has to be put into addressing a larger framework to support such a revenue-generation strategy – of which little is in place.
ii) Electronic and non-electronic cigarettes are divided into those containing nicotine and those that do not. The aforementioned 2016 cabinet directive was reaffirmed via a parliamentary reply on September 23 by Health Minister Datuk Seri Dr Adham Baba, that all devices containing nicotine remain under the Poisons Act 1952 and Sale of Drugs Act 1952.
This means that the sale of any nicotine-containing preparations is allowed only by licensed pharmacists and registered medical practitioners for the purpose of medical treatment. Health Director-General Tan Sri Dr Noor Hisham Abdullah voiced concern on this matter two days ago.
The excise duty for all liquids used in e-cigarettes makes no mention of whether this includes nicotine.
Questions arising here include whether there is even a large enough volume of legal users/prescribers to justify the revenue that will arise from taxing these liquids, and whether this will create a “grey area”, where sellers are free to use nicotine in their products despite it being illegal, and merely pay an excise duty for their troubles.
The sad reality is that data from the National E-Cigarette Survey 2016 clearly shows us that nicotine is widely present in the electronic cigarette or vape liquids being sold in the market, despite it being outlawed. Through this excise tax, is the ministry offering them a mechanism to “pay their way out of trouble” in terms of selling something that is illegal?
iii) Through this Budget, the strategy of an excise tax on electronic/non-electronic cigarettes unfortunately provides a “mantle of legitimacy” to the industry. Despite the narrative being touted by the industry as being an “alternative” to conventional smoking, and the idea that it is there to help those who want to quit smoking cigarettes, once again, the national data speaks for itself.
Thousands of Malaysians, especially young people who have never smoked cigarettes before, have become e-cigarette/vape users. And, thousands more use both conventional and e-cigarettes/vape.
The economic incentive for sellers to continue selling any form of these products to whoever they can is far too lucrative, and they have cashed in on this, especially since there have not been clear regulations.
With this “stamp” of legitimacy, one can fully expect sellers to mushroom, along with the sale of different sorts of illegal contents, including nicotine.
We strongly doubt that the net gain of the costs of increased enforcement, including the lab costs for analysing illegal liquids being sold, has been considered by the ministry in rationalising this excise tax. The final net result may lead to losses for the government, rather than gain.
For these reasons, MCTC remains committed to our stand of calling for a ban of all e-cigarettes/vape, a move already undertaken by many of our neighbours, including Thailand, Singapore and Brunei.
The health evidence becomes clearer every day, especially in terms of additional Covid-19 risks for those who use these products. Globally, the World Health Organisation and other bodies continue to provide clear and incontrovertible evidence on the harm posed by e-cigarettes/vape to all populations.
Thus, MCTC recommends that the ministry revisit these poorly advised measures, which will not even generate significant revenue, and will have far-reaching negative repercussions for the health of Malaysians.
It is imperative for the government to pass the long-awaited Tobacco Act, which is intended to regulate all tobacco-related activities. Through this act, much of the legal and operational framework for sustainable, effective and “real” revenue collection can be put in place. – The Vibes, November 9, 2020
The Malaysian Council for Tobacco Control is the umbrella civil society body for tobacco control in the country and comprises 41 organisations
