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Malaysia. Traders fear booze tax hike

There will be little cause to say “cheers” for the 3.5 million drinkers in the country if the Government decides to review the alcohol tax next month.

Those in the industry fear that the anticipated upward tax hike next month would be a burden to the consumers. The last hike was a decade ago.

Malaysia Singapore Coffee Shop Proprietors’ General Association president Ho Su Mong said any increase in excise duty would have adverse effects on coffee shop operators.

“This is not the time to raise beer taxes as coffee shop operators are already affected by the Goods and Services Tax (GST),” he told The Star yesterday.

“At present, between 4,000 and 6,000 coffee shop operators are finding it hard to survive.

“We hope the Government would reconsi­der any move to raise beer tax for the time being.”

Connexion Group’s group chief executive officer Kent Chua said a hike in excise duties would have a ripple effect on the industry.

“We would certainly like to appeal to the Government to not rock the boat further by increasing excise duty for alcoholic beverages and in the long run, look into serious tax ­reformation,” he said in a press statement.

He said a reduction in alcohol consumption would also result in lower revenue for the Government in the long run.

“For this year, there have been more bars and pubs that have closed down in a year than ever in the past five years,” he said.

Chua, whose company operates the popular Beer Factory, also said an increase could lead to a surge in alcohol smuggling.

Excise duty for beer currently is RM7.40 per litre plus 15% ad varolem tax.

Sids’ Pub’s proprietor Geoff Siddle said his business would surely be affected.

“Some pubs may have to let go some of their staff as sales drop,” he said.

Siddle, who has been operating pubs here for 20 years, also warned of an increase in alcohol smuggling, particularly in Sabah and Sarawak.

“Some may even travel to neighbouring countries to have cheaper drinks,” he said, adding that an increase in excise duties would hit the local food and beverage industry.

There are about 3.5 million alcohol drinkers in the country, which is the 10th largest consumer in the world, with an average RM2bil spent on such drinks annually.

The country has the third highest beer excise duties in the world, behind Singapore and Norway.

Prices of beer and stout varies depending on location and is sold between RM6 per can and RM18 per 500ml bottle.

1 Mar. 2016

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