Illicit tobacco trade costing Asia-Pacific govts US$14.85bil tax loss, says study
Malaysia is estimated to lose about US$775 million annually, with the estimated lost revenue (55%) exceeding the amount actually collected from tobacco taxation.
A new study by the Center for Market Education reveals illicit tobacco trade is costing Asia-Pacific governments an estimated US$14.85 billion in lost tax revenue annually. The research examines tobacco taxation and illicit-market penetration across 14 economies, highlighting how the issue goes beyond customs or criminal enforcement.
Illicit trade is estimated to exceed the amount collected from tobacco taxation in Malaysia, where losses per year are projected at US$775 million. The findings indicate that for every US$100 collected through tobacco taxation, approximately US$48 is lost due to consumption occurring outside the legal and taxable market. The study finds Malaysia and Pakistan experiencing the most severe structural cases, with illicit-market shares reaching 55% and 54%, respectively.
The report suggests governments should prioritize recovering the legal taxable base rather than focusing solely on increasing tax rates, as the legal market is crucial for effective fiscal policy.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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- Illicit tobacco trade costing Asia-Pacific govts US$14.85bil tax loss, says study freemalaysiatoday.com
