Consumer Choice Center Warns 1000% Vape Tax Hike Could Fuel Illicit Market

Kuala Lumpur, 9 October 2025 — The Consumer Choice Center (CCC) warns that the Health Ministry’s proposal to raise excise duty on vape liquids from RM0.40 to RM4.00 per millilitre, representing a 1000 percent increase, risks driving consumers toward illicit products, undermining harm-reduction goals, and reversing Malaysia’s progress in evidence-based public health policy.

CCC Malaysia Country Associate, Tarmizi Anuwar, said that the drastic increase would create unintended harm without addressing the root causes of youth vaping or nicotine dependency. “Taxation should guide behaviour, not punish it. A 1000 percent jump will not make Malaysia healthier. It will simply make safer products unaffordable and push consumers into unregulated markets,” he said.

Malaysia already records one of the highest illicit cigarette rates in the world. As of May 2025, the national illicit trade rate stood at 54.5 percent, according to Nielsen Consumer LLC. Although enforcement has improved and illicit trade has declined from previous years, this progress remains fragile. A sudden and extreme tax hike risks reversing these gains by reopening incentives for smuggling and unregulated sales.

Typical adult users consume around 5 millilitres daily or 32.5 milliliters weekly of vape liquid, meaning even moderate users would see their monthly expenses multiply tenfold under the proposed rates. For regular vapers using two millilitres daily, monthly costs could surge from RM24 to RM240, a tenfold increase that would hit low-income consumers hardest. 

Vape Tax Hike Backfiring

According to Public Health England, vaping is at least 95 percent less harmful than smoking, while the Office for Health Improvement and Disparities has found that in the short and medium term, vaping poses only a small fraction of the risks associated with traditional cigarette use. Punitive taxation therefore removes incentives for smokers to switch to these lower-risk alternatives. 

Moreover, the Health Ministry of Malaysia itself has acknowledged that detailed local disease data on vaping are still being collected. Policy decisions should therefore remain flexible and proportionate, not extreme.

In September, 83 leading public health experts warned in a joint letter that the European Commission’s new tobacco tax proposal ignores scientific evidence and risks reversing public health progress. They urged policymakers to implement fair taxation that reflects actual risk differences between products and praised the success of countries such as the United Kingdom and Sweden, which have reduced smoking rates to record lows through harm reduction and balanced fiscal policies. Yet, the Commissioner has ignored their advice. Tarmizi said Malaysia should learn from this mistake and not follow punitive models that neglect scientific evidence and practical outcomes.

Tarmizi proposes a tiered excise framework aligned with international best practices. All non-combustible nicotine products, including vape liquids, heated tobacco, and nicotine pouches, should be taxed at rates lower than traditional cigarettes. The government should maintain the current RM0.40 per millilitre rate for vape liquids under Malaysia’s mixed excise system, which already includes a 10 percent ad valorem tax. This approach ensures that less harmful alternatives remain more affordable and accessible than combustible tobacco, supporting the principle of risk-proportionate taxation within Malaysia’s existing fiscal structure. 

By doing so, it encourages adult smokers to switch to safer alternatives while maintaining government revenue and strong regulatory oversight. “If the government truly wants to protect youth and improve health outcomes, it must regulate smarter, not harder,” added Tarmizi. “A risk-based tax system that makes less harmful products more affordable rewards positive choices and keeps the market transparent, legal, and easier to enforce.”

Fall in smoking prevalence

International examples show the effectiveness of this approach. In Sweden, by taxing low-risk snus at a lower rate than cigarettes, daily smoking prevalence has fallen below five percent, the lowest in the European Union. In New Zealand, halving the excise on heated tobacco products in 2024 led to higher quit rates and a decline in illicit trade. In the United Kingdom, a harm-reduction framework that keeps regulated vaping accessible has contributed to record-low adult smoking rates at 12.9 percent. These cases demonstrate that science-driven taxation can reduce harm more effectively than prohibitionist measures.

The Consumer Choice Center urges Parliament and the Ministry of Health to review the proposal ahead of Budget 2026 and to conduct an impact assessment on price elasticity, consumer behaviour, and illicit trade. The government should phase in moderate, evidence-based adjustments rather than sudden hikes and ensure that excise revenues are channelled into cessation support, public education campaigns, and stronger enforcement. “Malaysia’s regulatory framework under Act 852 should be used to manage the market responsibly, not to eliminate consumer choice,” said Tarmizi. “Let’s make this a health policy guided by evidence, not emotion.”

***CCC Malaysia Associate Tarmizi bin Anuwar is available to speak on consumer regulations and consumer choice issues. Please send media inquiries to tarmizi@consumerchoicecenter.org.***

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

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