The alcohol tax on beer and stout is expected to go up by at least 10 per cent this week, a source in the alcoholic beverage industry said.
The Finance Ministry is expected to announce the revised rate at a press conference tomorrow. The last tax revision was a decade ago.
“We do not know by how much the government will increase the tax. It is now at 15 per cent and we think it can go up by an additional 10 per cent,” the source said.
“The manufacturers are now preparing a plan to raise their prices depending on the percentage announced by the ministry. Beer and stout will definitely cost more.”
Malaysia has the third highest tax on alcohol worldwide, behind Norway and Singapore, and the increase may translate to a several ringgit increase for consumers.
The expected tax hike will hurt the food and beverage, and tourism industries, groups say.
Malaysian Singapore Coffee Shop Proprietors General Association president Ho Su Mong said the increase would choke of businesses already struggling with the Goods and Service Tax (GST) and cost of living.
“Of our 20,000 members, some 30 per cent are struggling as it is. The increase could put them out of business and cause a loss of livelihood.
“Many members have pleaded with us to urge the government to consider postponing the tax hike till we are in better economic times,” he said, adding that the move would have a knockdown effect.
Ho said the hike would force manufacturers to increase their prices and this would cause retailers to pass on the hike to customers.
“In the end, our patrons will be paying for it and we will have to deal with the fallout from an angry public,” he said.
Alcohol Consumer-Rights Group founder Deepak Gill said the tax hike would adversely affect an already struggling tourist industry.
“It is not possible to underestimate the role these beverages play in drawing tourists. Rather than a tax hike, the authorities should instead reduce the tax on beer and stout.
“We already have tourists complaining that our beer prices are ridiculously high and they are considering other destinations,” he said.
Deepak said last year saw prices of alcohol shoot up by at least 15 per cent post GST and the depreciating ringgit had compounded the problem.
“Hops and barley have to be imported. This means the industry is already under strain and the additional pressure this hike will cause does not bode well for consumers,” he said.
A bar manager in Petaling Jaya, who wanted to be known as Kamran, said his business would be forced to absorb the increase in the short term.
“We are already in fierce competition for customers and now we have to contend with an increase in prices.
“We have to see how our competition will react. We have to absorb the costs for now so as not to lose our customers,” he said.
A bar manager, who wanted to be identified as Grace, said she had not been informed of any price increase but the move would hurt her business.
“I do not see how we will be able to weather this without eating into our capital reserves. Although some are doing well, most bars and pubs are barely breaking even and this will only add to the pressure we have to contend with,” she said.
Malaysia has the 10th largest drinking population worldwide spending an estimated RM2 billion annually on alcoholic beverages.
A 320ml can of regular Tiger and Carlsberg goes for RM10.50, while a 500ml can of Guinness retails at RM15.40. Carlsberg Special Brew is priced at RM14.70 per can.