PUTRAJAYA, Aug 7 — The government is considering a proposal to raise the tobacco tax rate, according to Prime Minister Datuk Seri Anwar Ibrahim.
Anwar, who is also the Finance Minister, said the proposal aligns with its commitment to public health and fiscal reform, particularly given the long-standing moratorium on tobacco tax hikes.
Malaysia's tobacco tax currently accounts for 58.60 per cent of retail prices. The country has no formal mechanism for periodic adjustments or revaluation of the rate, which was last increased in September 2014.
“I support the spirit (of staying healthy), not just because I do not smoke, but also due to the reach of anti-smoking campaigns,” he said in response to questions on whether the government may revise the tax in Budget 2026, to be tabled in October.
Anwar was speaking after attending a Budget 2026 engagement session today, where an economist suggested raising the rate to between 60 and 75 per cent.
Last week, when announcing the 13th Malaysia Plan, the Prime Minister said the government would broaden its “pro-health” tax beyond sugary products to also cover tobacco, vapes (e-cigarettes), and alcohol.
He said the expanded tax framework aims not only to increase revenue, but more critically, to encourage behavioural change and curb the rising prevalence of non-communicable diseases (NCDs).
NCDs, commonly associated with unhealthy lifestyles, include heart disease, stroke, diabetes, and cancer.
Anwar added that healthcare remains a key government priority, as the public system is under growing strain from medical inflation, the dual burden of communicable and non-communicable diseases, and an ageing population.
According to the Parliamentary calendar, Budget 2026 is scheduled to be tabled in the Dewan Rakyat on October 10.
