KUALA LUMPUR: Malaysian Retail Electronic Cigarette Association (MRECA) urged the government to adopt a sensible approach to the proposed vape taxation.
MRECA's comments come following reports yesterday that the deputy minister of finance II Steven Sim said that the government would likely propose regulating the e-vape industry under the re-tabled 2023 Budget, which would allow the government to add close to RM1 billion annually to its coffers over the near term.
MRECA president Datuk Adzwan Ab Manas said the association supports measures taken by the government to regulate the industry, including introducing a taxation framework.
"We see this as the first few steps to regulate the industry, and we welcome
them.
"However, we believe the approach needs to be sensible, and the rate cannot be too high," he said in a statement.
In October 2021, the ministry of finance, during the tabling of Budget 2022, announced an increase in taxation for vape liquid by 200 per cent.
This taxation framework has yet to be implemented pending regulations.
Adzwan said the proposed RM1.20 per ml announced previously was high and a 200 per cent increase.
It will see an additional RM36.00 imposed for each bottle of 30ml liquid while the retail price for that product is only half its price.
"This means the price of products will triple in prices.
"This will cause vape products to be costly and create demand for cheaper products that do not pay tax.
"It will also discourage smokers from switching as vape products end up becoming more expensive than cigarettes," he said.
Adzwan said MRECA proposes that the government maintain the excise tax for vape liquids at RM0.40 per ml, which is the current rate, to avoid seeing prices spike.
"In addition, MRECA also urges the government to introduce regulations for the industry immediately.
"Sensible regulations must complement taxation framework. It will not only ensure products meet quality and safety standards and provide a clear direction to the vape industry on the direction moving forward," Adzwan said.