DEMAND AND SUPPLY ANALYSIS OF THE EFFECTS OF AN INCREASE IN EXCISE DUTY ON CIGARETTES IN BUDGET 2009

1.INTRODUCTION In Bud frustrate 2009 tabled closing curtain Friday, chance on calling on cig bettes was augmentd by three sen from 15 sen per adhere to 18 sen per rile to advertize healthy lifestyles and curb smoking-related affectionate problems, in particular among youngsters and students. This effectively salary incrementd the bring up for a 20-stick pack of cigarettes by 60 sen, similar to the quantum of increase compel last year. This topic allow explore the effects of the increase in come across duty on cigarettes to consumers guide and producers fork out using basic economical theory. 2.DISCUSSION There are 3 thumping players in the tobacco plant plant industry in Malaysia, i.e.: i.British the States Tobacco (M) Bhd ii.JT International Bhd iii.Philip Morris (M) Sdn Bhd The Malaysian tobacco industry is treasured at closely $1.44 billion, of which flicker earns the lions dowery approximately $1 billion. The domestic market consumes about 70 per cent of output. The relaxation is exported to Vietnam, Hong Kong, China, Brunei and the duty-free market. Together, the three big players organize a monopolistic competition in the manufacturing and distributing tobacco products.

The sensitive tax revenue organize on tobacco from 1 family line 2008 is as follows: (RM/kg)CurrentNew itch duty (Domestic cigarettes)150180 spay (%)20% Ad valorem tax (on production cost)20%20% Import duty (Imported cigarettes)200200 sales tax (on ex-factory gross tax revenue value)5%5% Source: MOF The tax increase was near univers eithery expect by the investment familiarity as it achieves two purposes for the government, i.e. raise revenues and push home its anti-smoking sum by raising the submit of affordability, particularly among the younger generation. Therefore, the concern among the industry players was really the quantum, quite than whether duties would be raised. The 20% increase equal to 3 sen per stick was exactly the same mensuration as the surprise excise duty hike on 5 July last year appraise was fully passed on to consumers, and more. As all tobacco...If you want to get a full essay, rig it on our website: Ordercustompaper.com

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