A think tank has urged the government to increase tobacco taxes in the budget for 2026, saying the lack of increase over the last decade has made cigarettes more affordable due to rising incomes.
Social & Economic Research Initiative researcher Daniel Kittu said addressing illicit trade is important, but should not be used as an excuse to delay tax hikes.
He said revenue from higher tobacco taxes could also help fund stronger enforcement.
“A RM5 tax increase for a pack of cigarettes would generate an additional RM1.2 billion, according to the cost recovery and revenue estimator of the Tobacco Atlas.
“The choice is not either enforcement or taxation; both are necessary and complementary,” he said in a statement today.
He also warned that waiting for “perfect” enforcement before raising taxes was illogical.
“If we were to wait for this to be achieved, the government would never be able to raise taxes, making it next to impossible to fund public services,” he added.
The excise rate has not been raised since September 2014, when it was increased from 28 sen to 40 sen per stick.
Prime Minister Anwar Ibrahim previously indicated that the government was considering a hike. When announcing the 13th Malaysia Plan, he said the government would broaden its “pro-health” tax beyond sugary products to cover tobacco, vapes and alcohol as well.
Kittu said that Malaysia already has a simple excise tax structure, in line with recommendations by the World Health Organization (WHO).
He dismissed comparisons with countries like Indonesia, where he said complex tiered taxes allowed smokers to switch to cheaper products.
“While Malaysia can learn from other countries’ experiences, greater care must be taken to assess what is applicable,” he said.
“What Malaysia needs to do now is ensure a meaningful increase in tobacco taxes in the 2026 budget and have regular increases taking inflation and income growth into account, per the recommendations in the WHO Framework Convention on Tobacco Control.”
Kittu added that 27,200 Malaysians die annually from tobacco use, saying every year of delay meant more deaths, higher healthcare costs, and lost revenue.
“The case is clear: raise tobacco taxes now, strengthen enforcement in parallel, and fund a healthier Malaysia,” he said.
