NGO shocked vape tax revenue not used for health as promised

A health think tank has expressed shock that taxes imposed on vape liquids have not been earmarked for health initiatives, as promised in the tabling of Budget 2023.

Instead, the revenue from taxes imposed on nicotine and non-nicotine vape liquids since May 1, 2023, has been deposited directly into the Federal Consolidated Fund.

"This move is in direct contradiction with one of the supporting arguments used to justify and enact the tax and breaks one of the promises made during the finance minister's budget speech on Feb 24, 2023.

"In that speech, he pledged to earmark half of the revenue collected to be used for health.

"This money is intended to complement existing allocations given to the Health Ministry, especially in the area of health education and promotion which is severely underfunded," said Galen Centre for Health and Social Policy chief executive officer Azrul Mohd Khalib in a statement today.

According to a written reply in Parliament to Wan Saiful Wan Jan (PN-Bukit Gelugor), the government collected RM141.11 million in vape liquid tax revenue, including RM58.55 million from vape liquid containing nicotine, from 2021 to 2024.

Azrul added that this compounds the negative impact of the removal of liquid nicotine from the Poisons Act - said to facilitate tax revenue collection - without an alternative law to regulate nicotine sale and use.

This includes free sale of such products to children and adolescents, including through self-serve vending machines.

"It was and continues to not be illegal for retailers to sell them to children. We have seen a dramatic increase in the number of individuals who vape and are underaged," Azrul said.

Most vape users aged 15 to 24

The Health Ministry's survey in 2023 found that the prevalence of vape use surged 600 percent from 2011 to last year, while most e-cigarette or vape users are aged 15 to 24.

"This is what public health advocates predicted would happen if the government proceeded with deregulation and it is now a reality," Azrul said.

He added that even half of the tax revenue collected from vape liquids could have helped mitigate the damage caused by the failure to regulate nicotine use in the past year.

"This was how the government justified to public health experts, advocates and anti-cancer groups on the need to remove nicotine vape from the scheduled list, introducing regulation, instead of banning them outright," he said.

Nicotine was removed from the Poisons Act under the watch of then-health minister Dr Zaliha Mustafa, who said a new bill would be tabled to regulate vapes, vape liquids and gels, in the May 2023 Parliament sitting.

The Control of Smoking Products for Public Health Bill was tabled late that year without any clause to regulate nicotine use, while the controversial “generational end game” portion meant to bar the sale of vape and cigarettes to those born after Jan 1, 2007, was also removed.

Zaliha was replaced with Dzulkefly Ahmad in December 2023, who upon taking over, apologised for the absence of the GEG portion from the bill and affirmed the ministry's stance against nicotine addiction and smoking.

Zaliha's predecessor Khairy Jamaluddin blamed industry lobbyists for scuttling efforts to regulate vaping.

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