THE Government’s proposal to impose excise duty on cigarettes in duty-free areas may cause retailers to lose up to 30-40% of their annual revenue.
The Langkawi Chinese Chamber of Commerce president Lee Han Eng said it will be detrimental to tax cigarettes which are one of the much sought after items at duty-free outlets alongside beers and liquors.
“Imposing tax on popular items in duty free areas will naturally lead to a fall in demand,” he pointed out in a media release.
“More worrying is the fact that some retailers will not only lose purchasers of that particular item, they may potentially suffer from a drop in overall customer traffic.”
According to Lee, the business risk is higher for retailers who specialise in offering a limited range of product items to cater to a predominantly tourist market.
He was commenting on the calls for the Government to re-consider imposing excise tax on cigarettes in all duty free areas. This new tax initiative was announced by the Finance Minister Tengku Datuk Seri Zafrul Tengku Aziz during his Budget 2021 speech recently.
The Langkawi Chinese Chamber of Commerce also stated that duty free areas do generate a positive multiplier effect on the Malaysian economy.
In addition to attracting local and foreign tourists, these areas generate jobs and business opportunities for locals while attracting domestic and international investments from the property to hospitality sectors.
“The retail and tourism industry are some of the sectors that are suffering the most from the COVID-19 crisis,” Lee pointed out.
“Imposing taxes that will cut their revenue further may result in many businesses going under, causing more job loss and income crunch.”
He added: “We would like to plead to members of parliament for duty free havens of Langkawi, Labuan, Pangkor and Tioman to hear our plight and help us resolve this matter”. –Nov 24, 2020
