BOTH cigarettes and alcoholic beverages were subjected to a higher sales tax of 25% and 20% respectively, effective yesterday, as a preventive measure to combat excessive smoking and consumption of liquor.

While smoking can cause cancer and alcoholism can ruin families, these habits are serious concerns to the Government as they can create other social problems.

The cigarettes and tobacco items affected are cigars, cheroots, cigarillos, cigarettes, of tobacco or of tobacco-substitute products.

Alcoholic beverages include beer made from malt not exceeding 5.8% volume of alcohol or others, wine of fresh grapes, including fortified wines, sparkling wine, vermouth and other wine of fresh grapes flavoured with plants or aromatic substances, rice wine (including sake and medicated rice wine), whiskies, rum and tafia, gin and geneva, vodka and others.

Currently, premises which are licensed as First Class Public House or First Class Beer House which provide alcoholic beverages and beer are subject to a 5% service tax.

Other premises licensed as Second and Third Class Public and Beer Houses are not subject to the service tax.

In order to accord the same tax treatment on similar services, it is proposed that service tax be rationalised to cover all classes of Public and Beer Houses from Jan 1.

However, while nightspot patrons may have to cough up more for beer and cigarettes, the rise in duties is unlikely to put them off their vices.

The increases amount to about 40 sen more for a packet of cigarettes and an extra RM1 for a mug of beer.

"You have to be philosophical about it. "It means coughing up more money for your vices, but I don't think this will result in a significant drop in smokers or drinkers," said Jerry Rajendram, managing director of an advertising company who patronises the Backyard pub in Taman Sri Hartamas, Kuala Lumpur.

The Ship Group's managing director Simon Foo said the increased duty for liquor and cigarettes was not alarming and he did not think his business would suffer as a result.

"The tax increases are quite manageable.

"Previous Finance Ministers had increased the taxes by much more," he added.

Foo pointed out that prices of cigarettes in developed countries were much higher.

He said The Ship restaurants would likely review liqour prices by next week. "We have absorbed previous tax increases for beer and we have not increased prices for at least three years now.

"It is only fair that with the latest increase, we are allowed to make some adjustments," he added.

Foo said he did not believe the increase would result in a drop in business for him.

Pix: PAYING MORE ... patrons of the Backyard Pub in Kuala Lumpur enjoying their favourite drink. They will now have to pay more for alcoholic beverages. Notes: Budget 2001.

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