Health think tank calls for cigarette tax hike to 65 sen next year

A health think tank has urged the government to raise the excise duty on cigarettes from 42 sen to 65 sen per stick next year and commit to yearly increases to 95 sen by 2031.

In a briefing note released today, the Galen Centre for Health and Social Policy proposed a five-year tax pathway that it said could generate more than RM2 billion in additional annual revenue by 2031.

It said the schedule should be pre-announced as well as legislated.

Under the proposed road map, the excise duty would rise to 72 sen per stick in 2028, 80 sen in 2029, 88 sen in 2030 and 95 sen in 2031. The 2027 increase would add RM4.60 in duty to a 20-stick pack.

Azrul Khalib, the think tank’s CEO, said the two-sen increase in the 2026 budget was an important step but did not restore the real value of the tax after years of rising prices, incomes and healthcare costs.

“The 2027 budget should therefore not deliver another token increase. There should be no further two-sen increase,” he said in a statement today.

“Instead, the budget should mark the beginning of a structured and predictable tobacco tax reform in 2027 that strengthens commitment towards a nicotine-free generation, discourages smoking and gives the government greater certainty over future revenue.”

The cigarette tax has not been raised since September 2014, when it was increased from 28 sen to 40 sen per stick.

Malaysia’s tobacco tax currently accounts for 58.6% of retail prices, below the World Health Organization’s recommendation of 75%.

However, Galen Centre said the higher excise duty should be accompanied by stronger enforcement against illicit cigarettes rather than allowing concerns over the illicit market to delay tax increases.

In the briefing note, the think tank called for closer cooperation between the finance and health ministries and the customs department, including stronger border and supply-chain controls, improved tax-stamp integrity and independent monitoring of the illicit cigarette trade.

It also proposed that a defined share of additional tobacco tax revenue be channelled towards tobacco control enforcement, smoking cessation services and treatment of non-communicable diseases.

Galen Centre rejected the argument that higher cigarette taxes would disproportionately hurt lower-income smokers, saying they were generally more responsive to price increases.

“Higher tobacco taxes can reduce consumption and encourage quitting, especially among price-sensitive smokers,” it said, adding that the policy should be accompanied by affordable cessation support.

Galen Centre also called for annual, independent assessments of the illicit cigarette market and more consistent data on tobacco consumption, cessation and tax revenue.

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