Careful study on vaping tax structure needed - MQ Consultant

Despite the high revenue potential of the vape market, the industry is taxed much lower than the tobacco industry, it said.

“Taxing is one of the first important steps to regulate the growing vape economy, with Malaysia estimated to be the second-largest vape market in the world after the United States, and with different dynamics compared to cigarette economics, a careful study on the tax structure is needed.

"We can't use a blanket method to cover it all," it said in a statement.

MQ Consultant is a local research and technology company engaged in in-depth study on vape economics and industry in Malaysia.

Taxation on the vape industry, to follow suit the tobacco industry, was among the many highlights contained in Budget 2021 approved last Thursday in Parliament.

As announced during the 2021 Budget, the government has proposed to impose 10 per cent ad valorem excise on all electronic and non-electronic smoking devices, as well as a 40 sen per millilitre of excise duty for e-cigarette and vaping liquids with and without nicotine, beginning from Jan 1, 2021.

"However, the vaping industry is taxed much lower than the tobacco industry despite its high revenue potential. There is an increasing number of people in the world who smoke today, opting to vaping," said MQ Consultant, adding the majority of other countries imposed a much higher tax than Malaysia.

It also said that with the help of data and research that is actively being compiled locally and internationally, the government could take advantage by using vaping as a tool to help the public in transforming into a possible smoke-free society.

"This effort is not an experimental idea as it has been adopted by the New Zealand Government as a tool to achieve its goal to become a smoke-free nation in 2025.

"With a tax regulation in place, Malaysia can finally design a win-win situation that will not only contribute to the country’s economy but also will benefit the government's effort in improving Malaysia's social and health status in the long term," it added.

Meanwhile, an independent survey estimated that there are three million e-cigarette users in Malaysia currently.