Picture source: Grant Black / Calgary Herald
Tobacco use (smoking and smokeless) is recognised as one of the foremost avoidable contributors to the world’s mortality statistics. It is a key modifiable risk factor of non-communicable diseases (NCDs) such as cancer, lung, and cardiovascular diseases. World Health Organization (WHO) has projected that tobacco use leads to premature deaths of about eight million people worldwide annually. This estimation includes approximately 600,000 non-smokers who are also foreseen to decease as a consequence of exposure to second-hand cigarette smoke (World Health Organization, 2015).
According to our National Health and Morbidity Survey (NHMS) 2019, 21.3% of adults aged 15 years old and above, approximately 4.88 million Malaysians are currently smoking, with a higher percentage of males (40.5%) compared to females (1.2%) (Institute for Public Health, 2020). Malaysia has spent about RM15 billion (1.7% of 2012 GDP) on tobacco-related health care costs.
Despite the evidence of the most significant potential positive equity impact on smoking by increasing tobacco prices via taxation, Malaysia’s last tobacco excise tax rate increase was in 2015. As of 2019, the total taxes on the most sold cigarette brand in the country was 45.7% of the retail price. Notwithstanding these increments, Malaysia has yet to reach the suggested WHO benchmark of at least 75% tobacco tax over the retail price (World Health Organization, 2019). In October 2019, Malaysia’s government announced the deferment of tobacco tax raise, which was initially applicable in 2020. The suspension was following an aggressive media campaign by the tobacco industry, which successfully portraying tobacco smuggling as an immense matter due to raised taxation in the country, citing an Oxford Economics report sponsored by Philip Morris International (PMI) (J. Reyes, 2020).
Why is Tobacco Taxation Important?
The benefits of tobacco taxation are three-folds.
Firstly, tobacco taxation can reduce smoking prevalence through changes in smoking behaviour, especially among adolescents and low socioeconomic population groups, as they are elastic to the price changes. In other words, they are more responsive to price changes. Evidence has shown that increasing cigarette prices would reduce the consumption of cigarettes. In the long term, they are more likely to quit smoking.
Secondly, taxation can correct the negative externalities in the tobacco market regarding the negative impact of second-hand or even third-hand smoke, loss of workers’ productivity, and the burden of associated healthcare costs.
Thirdly, more government revenue can be generated through increasing tobacco taxation.
Does Malaysia have an effective taxation system?
Mohamed Nor et al. (2018) predicted that Malaysia could achieve the 15% and below 5% smoking prevalence targets by 2025 and 2045 correspondingly, as demonstrated by the Malaysia Abridged SimSmoke model. The achievement is made possible by adopting evidence-based price (tobacco tax policy) to 72% of the retail price (currently it is only 45.7% of the retail price) and other non-price tobacco control policy measures (a fully funded mass media campaign advising about the tobacco use risks and dangers, comprehensive prohibition on tobacco product marketing and promotion, and improving smoking ban enforcement) according to the WHO FCTC guidelines (Mohamed Nor et al., 2018).
Attention should be given to the effectiveness of taxation. The impact of income on tobacco use needs to be considered when evaluating the affordability of tobacco products, whereby the price of cigarettes should be raised more than the increase in real income. For Malaysia, without a consistent rise in the excise tax rate that matches with the income and inflation, the real excise tax and the real retail price will only continue to decrease from 2015 onwards.
Based on the Cigarette Tax Scorecard, which assesses the performance of cigarette tax policies in over 170 countries using data from WHO Global Tobacco Control Reports, Malaysia scored 0 for the affordability change due to the stagnancy of tobacco excise tax rate since 2015 (Chaloupka, 2020).
What are the recommended strategies?
The tobacco industry often uses the economic value and tactic of “raising tobacco tax leading to increase illicit cigarette” to create consistent and sustained central messages and themes to lobby or influence the government’s decision on tobacco taxation policy. In comparison, tobacco control proponents focus on the value of health. So, it’s time for us to reframe the issue by combining the health value as well as from the perspective of economic using the common economic language.
- Uniform cigarette excise tax with regular increases and significantly reduce the affordability of cigarettes by pre-announcement of a series of increases in excise tax, regardless of government changes.
- Optimal tax strategy to maximise revenue, reduce cigarette consumption, and gain health benefits. The suggested optimal excise tax rate is RM0.77 per stick, which is a 92.1% increase in the excise tax rate (equivalent to 61.8% excise tax to the retail price). This would generate additional tax revenue of RM771.8 million.
- The definitional scope of public health includes the multiple determinants of health, and the tobacco control movement must, therefore, actively engage others who have convergent concerns on common determinants.
- Science does not speak for itself; people must speak for science. Apart from the health sector itself, voices should also come from other sectors, NGOs, and even public opinions through the media.
The Malaysian government should raise the current cigarettes excise tax. Tobacco taxes denote a triple victory for government by improving health, reducing associated costs, and increasing tax revenues. Furthermore, in the current context of COVID-19 crisis, the potential additional revenue generated from increasing tobacco excise tax could be used to respond to the pandemic or support our country’s finance economic recovery. Thus, it is essential to enhancing policy coherence between the fiscal and public health sectors concerning excise taxes on tobacco products.
Lastly, we would like to echo the slogan that Associate Professor Dr Norashidah Mohamed Nor advocated during a recent ‘Tobacco and Smoking Products Taxation’ webinar on Friday, 27th August 2021, which is, “Merdeka-kan-lah Diri Anda”. To smokers, free yourself from smoking; to the Malaysian government, free yourself from the tobacco industry interference and save our Malaysian Family from tobacco and smoking products.
Dr Gan Shiz Yee and Associate Professor Dr Farizah Mohd Hairi are with the Department of Social and Preventive Medicine, Faculty of Medicine, University of Malaya.
References
Chaloupka, F., Drope, J., Siu, E., Vulovic, V., Stoklosa, M., Mirza, M., RodriguezIglesias, G., & Lee, H. (2020). Tobacconomics cigarette tax scorecard. Retrieved 27 August 2021, from https://tobacconomics.org/files/research/636/uic-tobacco-scorecard-report-eng-v7.1.pdf
Institute for Public Health, M. (2020). National Health and Morbidity Survey (NHMS) 2019: Vol. I: NCDs – Non-Communicable Diseases: Risk Factors and other Health Problems. Retrieved 12 November 2020, from http://www.iku.gov.my/images/IKU/Document/REPORT/NHMS2019/Report_NHMS2019-NCD_v2.pdf
Reyes, M. A. (2020). SEATCA Tobacco Industry Interference Index: Implementation of Article 5.3 of the WHO Framework Convention on Tobacco Control in ASEAN Countries, 2019. Retrieved 16 December 2020, from Southeast Asia Tobacco Control Alliance (SEATCA). Bangkok, Thailand.: https://seatca.org/dmdocuments/SEATCA_TII_INDEX_2019_vF.2_web.pdf
Mohamed Nor, N. M., Ross, H., Thinng, W. B. K., Ghani, J. A., Hassan, N., & Baharom, N. (2018). Malaysia Abridged simsmoke model-towards achieving 2025 and 2045 smoking prevalence targets. Malaysian Journal of Medicine and Health Sciences, 14(3), 8-15.
World Health Organization. (2015). WHO Global Report on Trends in Tobacco Smoking 2000-2025 – First edition. Retrieved 20 October, 2019, from https://www.who.int/tobacco/publications/surveillance/reportontrendstobaccosmoking/en/
World Health Organization. (2019). WHO report on the global tobacco epidemic, 2019. Country Profile: Malaysia.Retrieved 17 November 2020, from https://www.who.int/tobacco/surveillance/policy/country_profile/mys.pdf?ua=1
[This article belongs to The Malaysian Medical Gazette. Any republication (online or offline) without written permission from The Malaysian Medical Gazette is prohibited.]