METHODS: This study employs a rigorous gap analysis to measure the size of the illicit cigarette trade in Malaysia and compare it with the industry estimates.
FINDINGS: We found that in 2019, the illicit cigarette market share ranged from 38.2% to 52.5%, depending on assumptions with respect to consumption under-reporting, which is substantially less than the industry estimates. We found that the size of the illicit cigarette market was not driven by higher excise tax: doubling the excise tax rate from RM0.20 to RM0.40 per stick in November 2015 resulted in only a slight increase in the illicit cigarette market share and no increase in the number of illicit cigarettes in the market.
CONCLUSIONS: Therefore, a reduction in cigarette excise taxes, as suggested by the industry, will not solve the problem of illicit cigarette trade in Malaysia. Instead, the government should ratify the Framework Convention on Tobacco Control's Protocol to Eliminate Illicit Trade in Tobacco Products and implement the strategies outlined in the protocol.
DESIGN: Panel data comprising alcohol-product (n = 15) by importing country (n = 16) observations from 1988 to 2016 constructed from global databases. The relationship between PTA status, tariff level and alcohol imports were assessed using a log-linear model. Unobserved heterogeneity was addressed through a combination of differencing and product-year fixed-effects.
SETTING: Australia and its 16 free trade partners (PTA year in parentheses), classified by low [ 50%: Chile (2009), China (2015), Japan (2015), Korea (2014), Laos (2010), New Zealand (1983, 2010), Philippines (2010), Singapore (2003, 2010) and United States (2005)] percentage of alcohol consumers in the population.
MEASUREMENTS: Independent variables were the existence of a PTA with Australia and tariff (border tax) rate on Australian products. Outcomes were (log) Australian imports; and a binary indicator of any imports from Australia.
FINDINGS: Introducing a PTA has been associated with a statistically significant increase in the share of Australian alcoholic beverage imports in its partner country's total alcoholic beverage import supply, mainly from trade in new alcoholic beverage categories (0.067, P
METHODS: Using panel data from the 1999-2015 Euromonitor International, the World Bank and the World Health Organization, we applied fixed effects regression models of panel data to estimate the elasticity of cigarette prices and to simulate the effect of price fluctuations.
RESULTS: Cigarette price elasticity was the highest for countries with a per capita Gross National Income (GNI) above US$6000 (China and Malaysia), and considerably higher for other economies in the region. The administered simulation shows that with an average annual cigarette price increase of 9.51%, the average annual cigarette consumption would decrease by 3.56%, and the average annual tobacco tax revenue would increase by 16.20%. The number of averted smoking-attributable deaths (SADs) would be the highest in China, followed by Indonesia and India. In total, over 17.96 million lives could be saved by tax increases.
CONCLUSION: Excise tax increases have a significant effect on the reduction of smoking prevalence and the number of averted smoking-attributable deaths. Middle- and upper-middle income countries would be most affected by high-taxation policies.