JTI disappointed with higher taxes, ups cigarette prices

JT International Bhd (JTI Malaysia) said it has increased the retail price of its 20-stick cigarette packs by 70 sen with effect from yesterday, following the government’s implementation of a 16% hike in excise tax.

The cigarette brands distributed by JTI Malaysia are Winston, Mild Seven, Camel and Salem.

In a statement yesterday, JTI Malaysia managing director Shigeyuki Nakano said the company was “very disappointed” with the government’s decision to impose the “hefty” excise duty increase, which would translate into about three sen per stick of cigarette.

With that increase, the excise tax on cigarettes now stands 16% higher at 22 sen per stick.

The recent raising of excise tax on cigarettes on Oct 1 comes two weeks before the government is scheduled to table Budget 2011 in parliament on Oct 15.

This year’s increase of three sen per stick is steeper than the one sen per stick increase in 2009, which was also announced in the lead-up to the tabling of Budget 2010.

Nakano added that tobacco players had continuously appealed to the government for a more holistic approach to meet the government’s revenue and health objectives, namely to implement a moderate tax increase alongside enhanced enforcement of smuggling and trade of illicit cigarettes.

JTI Malaysia said it strongly believed that the 16% excise increase would continue to spur the growth of the country’s multi-billion ringgit trade in illicit cigarettes, which the company estimated to be around 40% of the market.

JTI Malaysia’s statement echoes the disappointment expressed by other tobacco players who concurs that raising excise tax on cigarettes would only fuel the illicit trade.

According to a Global Tobacco Report in June 2010 by Goldman Sachs, Malaysia came out top in having the highest level of illicit cigarettes trade incidence in the world in 2009.


This article appeared in The Edge Financial Daily, October 6, 2010.