Malaysia’s Vape Tax Nets RM183 Million, Strengthening National Budget, Says PM Anwar

Malaysia has collected a substantial RM183.1 million in taxes from electronic cigarettes and vape products over the past three years. Prime Minister Datuk Seri Anwar Ibrahim announced that this revenue, accumulated between 2021 and 2024, includes both nicotine-containing and nicotine-free products. The taxation move aims to bolster the nation’s consolidated fund, adhering to constitutional requirements. The revenue collected signifies the government’s commitment to regulating the vape industry while generating funds for national development. This significant sum reflects the growing popularity of vape products in Malaysia and the government’s proactive fiscal measures.

How Vape Taxes Contribute to Malaysia’s Economy

The RM183.1 million collected from vape taxes is not a small change. It’s a substantial contribution to the country’s consolidated fund.

Here’s how the funds are allocated:

  • Nicotine-containing products: RM100.3 million collected.
  • Non-nicotine products: Taxed at 40 cents per milliliter.
  • Electronic devices: Subject to an ad-valorem rate of 10%.

These taxes commenced at different times. Non-nicotine liquid and gel taxation began on January 1, 2021, while nicotine counterparts started on May 1, 2023. The staggered implementation reflects the government’s phased approach to regulation.

Consolidated Fund Receives Boost from Vape Taxes

All the tax revenue from vape products goes straight into the government’s consolidated fund.

According to Article 97(1) of the Federal Constitution, all revenues must be channelled into the consolidated fund.

Year Tax Revenue (RM million)
2021 Data not specified
2022 Data not specified
2023 Data not specified
Total 183.1

Note: Specific annual breakdown not provided.

These funds are then utilized through the annual national budget process. They support various administrative and developmental expenditures, including healthcare programs.

Calls Grow for Vape Tax Revenue to Fund Public Health

Not everyone is thrilled with how the vape tax revenue is being used. Some believe it could be put to better use.

The Galen Centre for Health and Social Policy has urged the government to allocate half of the vape tax revenue to public health initiatives. They argue that the funds should address the consequences of unregulated marketing and sales of disposable nicotine vape devices. The Centre points out that in the Finance Minister’s budget speech on February 24, 2023, there were references to using vape taxes for health purposes. This has sparked discussions about the best use of these substantial funds.

Health experts and doctors have also voiced concerns. The legalization of vape and e-cigarettes has them worried about public health implications. They advocate for stricter regulations and dedicated funding to mitigate potential risks.

The Debate Over Nicotine Exemption from Poisons Act

The introduction of vape nicotine taxes also led to nicotine liquids and gels being exempt from the Poisons Act 1952.

This move has not gone unnoticed. Critics argue that exempting nicotine from the Poisons Act could have unintended consequences. Health professionals fear it may lead to increased usage among youths. The government’s stance is that regulation and taxation are more effective than prohibition. However, the debate continues as stakeholders weigh the potential risks and benefits.

It’s a complex issue with valid points on both sides. What remains clear is that the conversation around vape products in Malaysia is far from over.

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