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Singapore’s war on tobacco is in full swing. The country’s Immigration and Checkpoints Authority announced on Tuesday that it had seized a total of 3,331 cartons and 6 packets of contraband cigarettes as well as 226.6 kg of chewing tobacco over the weekend at the Tuas checkpoint. Had the illicit products gotten through, over $254,000 in customs duty and taxes would have been evaded.
Seeking to cut smoking rates and raise revenue, Singapore has been increasing taxes on cigarettes since 2003. To give just one example, in February 2014 Deputy P.M. and Finance Minister Tharman Shanmugaratnam announced that excise duties on tobacco were to be raised by 10%, with immediate effect. At the time, he underscored that “Smoking prevalence has increased, especially amongst youths aged 18 to 29,” and that the tobacco tax spike aims “to discourage this trend.” He also noted that the increase was expected to yield $50 million more in annual revenue for the government.
Despite the troubling upswing in youth smoking, overall the country’s smoking rate has fallen to 13.3% of the population, one of the lowest levels in the world. And the government is pushing to reduce that level to 10% by 2020. Therefore, along with ramping up educational programs, it will continue to raise taxes on cigarettes and crack down on smugglers. In 2014, the country’s authorities seized 3 million packs of contraband cigarettes, up 3.4% from the previous year, and numbers are likely to keep rising.
All of this means that the price of cigarettes in Singapore is temptingly high for smugglers from nearby countries, where packs are far cheaper and smoking is pervasive. According to the cost-of-living comparison website Expatistan, a pack of Marlboros costs $3.19 in Kuala Lumpur, Malaysia, and $1.33 in Jakarta, Indonesia, while in Singapore the price is $9. And according to the World Bank, in 2012 72% of adult Indonesian males and 45% of adult Malaysian males smoked.
And Malaysia conveniently shares a land border with Singapore, making it the prime entrance for smuggled goods. In fact, in both of the reported seizures over the weekend, the contraband was hidden in modified compartments of a Malaysia-registered bus, driven by a Malaysian.
Penalties for smuggling are steep in Singapore—one of the Malaysian drivers has already been convicted and sentenced to 30 months in prison (and investigations are ongoing regarding the other man). But they are clearly not enough to dissuade smugglers.
Cigarette smoking is a blight on society with enormous health costs, so Singapore’s strict stance is commendable. Malaysia and Indonesia should start following Singapore’s lead by raising their own cigarette taxes.
