Govt can boost revenue base by taxing vape sector, says analyst
KUALA LUMPUR: The government can regulate and tax novel industries, including the multibillion ringgit vape sector, to broaden its revenue base, said investment and economic analyst Pankaj Kumar.
His comments followed the release of Bank Negara Malaysia’s Economic and Monetary Review 2020 report on Wednesday.
“While Bank Negara has projected a six to 7.5 per cent gross domestic product (GDP) growth this year, we are not out of the woods yet.
“The economy is at risk from the uncertainties surrounding the Covid-19 pandemic, possibility of commodity shocks and potential problems relating to Covid-19 vaccine rollout.”
He said Malaysia’s household debt-to-GDP ratio had surged to a new peak of 93.3 per cent while the federal government’s debt had risen to 62.2 per cent of the nominal GDP as at end-December last year.
“We are in a dire need of new sources of revenue and untapped industries such as the vape sector provide an opportune avenue.” He said the sector drew attention following a study by Grand View Research Inc that projected the global vape market size to reach US$67.31 billion by 2027, registering a revenue-based compounded annual growth rate of 23.8 per cent from last year to 2027.
“In tandem, the local vape industry has grown to RM2.27 billion in value, with some 3,300 related businesses that employ 15,000 workers.
“Thus, there is a potential RM300 million revenue gain if government broadens the tax regime to include nicotine vaping e-liquids,” he said.