Tobacco giant wants Health Ministry to clarify on SST in cigarette pricing

A tobacco company has urged the Health Ministry (MOH) to clarify its stand on the implementation of the sales and services tax (SST) on tobacco products.

In a statement, JT International Bhd (JTI Malaysia) JTI Malaysia managing director Cormac O'Rourke said the ministry had not issued any statement regarding the price of tobacco with SST implementation, which went into force this month.

This, he noted, had created confusion and resulted in a price war in the market.

"When the goods and services tax (GST) was zero-rated on June 1, 2018, both MOH and the Finance Ministry issued specific statements that tobacco companies were prevented from reducing prices equivalent to the 6 percent GST imposed on the product.

"Following the introduction of SST on September 1, prices of cigarettes are by law required to be increased under regulations administered by the Ministry of Health.

"As of September 5, JTI increased the prices for all its products based on the differential tax rates between GST and SST. However, the current situation where there are differences in prices set by tobacco manufacturers has triggered a pricing dynamic in the market not seen in Malaysia for many years," said O'Rourke.

The company, which markets cigarette brands, such as Camel, Winston and Mevius, said the situation had seen the price of some tobacco products increased before they were reverted to old pricing days later.

Therefore, O' Rourke urged the MOH to "intervene and decide on a price point", taking into account the required pass on of the differential rate of SST and GST.

He said the ministry should also disallow any tobacco company from gaining price advantage by discounting their product prices.

"This is to avoid any price advantage by way of price promotion which is against the Ministry of Health’s own laws." - Mkini

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