Do consumers really care about tobacco taxes?

What do consumers really want for the wide range of products they have access to daily? Most of us would say traits they’d insist on include value-for-money, non-toxic, minimum quality standards for production cleanliness and lifespans plus being easily available on demand. Choices rank high too as competitive offerings allow for brand loyalty as consumers know what to expect for their money.

But how many consumers really care for taxes imposed on products? Most would prefer if there were no taxes imposed – whether a broad one like value-added taxes (VAT) or specific to products like fuel or even cigarettes.

However, British American Tobacco (Malaysia) Berhad (BAT Malaysia) would like many to believe consumers in general don’t really mind paying for the extremely high taxes imposed on tobacco products (which can range from 500% to as 5,000% across various Southeast Asian nations) and would even stand up against far cheaper black market imports.

It recently conducted a nationwide survey within Malaysia as part of its “Stop The Black Market” campaign and issued a statement stating key findings of the survey include:

  • an overwhelming majority (88%) of Malaysians believe that the tobacco black market is impeding the nation’s Covid-19 economic recovery;
  • top three factors sustaining the tobacco black market are corruption (38%), high excise duties (27%) and insufficient resources for enforcement agencies to tackle the issue (19%);
  • 9 out of 10 Malaysians (97%) want the government to take immediate action against the tobacco black market, which contributes to more than RM5 billion losses in uncollected taxes every year; and
  • Malaysians believe that reducing the price differential between legal and black market products (35%) and greater collaboration between law enforcement agencies (29%) are key in countering the tobacco black market.

Jonathan Reed, Managing Director of BAT Malaysia said: “We welcome the enthusiastic response by Malaysians to our STOP THE BLACK MARKET campaign. Since it went live on 6 July 2020, the campaign website has had more than 30,000 unique visits.”

“From the feedback we received, Malaysians are very concerned about the tobacco black market and support immediate government action to clamp down on the criminal syndicates operating within this space. This support from Malaysians stems from the desire to see the economy recovering post Covid-19.”  

The nationwide survey commissioned by BAT Malaysia in July 2020 consisted of an online survey of over 2,000 Malaysian adults.

“BAT Malaysia will be making public the survey findings and launching a second survey on our campaign website https://stoptheblackmarket.com.my/ providing Malaysians with a channel to further express what can be done to address this issue quickly and comprehensively,” Reed added.

More pertinently, Asia’s leading e-cigarette manufacturer RELX Technology is determined to do its part to fight the counterfeit problem – posing serious health risk to consumers who think they are purchasing authentic vaping products.

These products may also contain harmful substances that could cause risk of injury or death to the user, said Eddie Chew, Regional Director of External Affairs at RELX Technology.

“The government has yet to introduce proper legislation to regulate vaping products and e-cigarettes in Malaysia. The uncertain regulatory environment has made it easy for vendors of counterfeit vape products to flourish.”

RELX Technology is hoping to implement an initiative in Malaysia similar to their programme in China, called the Golden Shield Program established in August 2019.

Under the Golden Shield Program, RELX successfully aided the Chinese authorities in solving 26 cases related to the production and sale of counterfeit vaping products. In June and July 2020, Chinese authorities, in collaboration with RELX, seized over 70,000 counterfeit e-cigarette products, with many of those goods bound for Southeast Asia including Malaysia.

“According to the test results done on the confiscated products in RELX’s laboratory, these illicit counterfeit or compatible pods often contain inferior e-liquid with harmful substances like toluene at levels that greatly exceed safety standards. Very often, the nicotine content does not even match what is advertised on the packaging.”

“We observed that the Golden Shield Program yielded very good results in China, and we hope to bring it to Malaysia where we could work with government agencies and industry partners,” explained Chew.

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