In July, the government had increased the excise duty on Cigarettes by 25 percent to 50 sen a stick, the first time such a move was taken outside the annual Budget.
"We are relieved to note that the government has not further increased the tax on Cigarettes in this Budget. Our stand has always been and remains that we propose regular, moderate and gradual tax increases," British American Tobacco Malaysia (BAT) managing director Jack Bowles said.
"This is because what we have seen and experienced, most clearly in the last three years, is that huge and sporadic tax hikes are catalysts for the growth of the illicit tobacco trade, which in turn negatively impacts the government's excise revenue, jeopardizes its health agenda and threatens the legal industry."
He pointed out that following the hike in July, excise taxes are now almost 300 percent of the level three years ago, and over the period, the illicit trade level rose from 14 percent in 2004 to 25 percent as of March 2007, which he described as an all time high and trending higher.
"This means that one in every four Cigarettes sold is illegal," he stressed.
Malaysian Brewers Bhd (MBB) described as positive news that the government did not raise the sin tax in the 2008 Budget.
Three consecutive years of increases from 2004 to 2006 in excise duties on beer and stout, which amounted to almost 50 percent, exerted "tremendous pressure on the already difficult, challenging and competitive environment," it said in a statement.
MBB said the duty-paid malt liquor market has declined by 14 percent since 2004 mainly due to the high consumer prices for beer and stout products and hoped the current duty level will be maintained for the next few years to allow the market to stabilize.