1 year later: What has cigarette tax really changed?
A year after the tax reform, public concern grows over enforcement, smuggling, and whether the policy has achieved its health goals.
When Maldives increased its cigarette tax in November 2024 through an amendment to the Export-Import Act, it was celebrated as a bold stride towards better public health. The premise was simple: make smoking expensive, curb consumption, and use the extra revenue to fund social programmes. But a year on, the picture is more nuanced. Prices have soared, the habit persists, and an underground trade has quietly expanded in its wake.
A single pack now costs roughly MVR 240-250, hitting lower-income smokers hardest. Yet the streets tell a contradictory story—cigarettes still change hands in single sticks, often stripped of tax stamps and health warnings. Reports of smuggled and untaxed cigarettes have been on the rise—most recent scandal hit local media headlines on 9 November when two containers of smuggled cigarettes seized by Maldives Customs Service allegedly “disappeared”. A policy designed to save lives now finds itself tested by a growing illicit market.
Maldives Customs data from January-July 2025 indicate sharp declines in legal tobacco imports since the new tax took effect. On paper, this looks like progress. However, a public-health economist at the Maldives National University warned that the fall in official imports may mirror a rise in unregulated products slipping through informal networks. In other words, fewer recorded sales don’t necessarily mean fewer smokers—just fewer paying the tax.
According to global trends, this outcome is predictable when ambition outpaces enforcement. Where tax increases outpace enforcement capacity, the illicit trade expands, governments lose revenue, and the public health objective is undermined. A customs-policy analyst who commented anonymously believes that “in a country of dispersed islands and limited border controls, price measures alone are unlikely to reshape habits.”
Meanwhile, the fumes of public frustration online continue to condense online. Social media is rife with photos of single-stick sales, while legitimate retailers complain that they are priced out by illicit competitors. Many feel the burden of reform has fallen on those who comply, while rule-breakers find ways around it. In such a climate, the policy’s intent – protecting public health – may be lost amid cynicism and inequity.
The Fiscal Reform Report issued on February 2025 by Centre for Market Education confirms that consumption taxes remain Maldives’ most significant revenue source, but gaps in oversight persist. Enforcement agencies remain under-resourced, and transparency on how tobacco revenue is reinvested is limited. These blind spots weaken public confidence and obscure the policy’s purpose.
While enforcement remains weak, the situation in Maldives is further complicated by restrictions on less harmful alternatives such as the vape ban and taxing heated tobacco at the same level as cigarettes. Without the expansion of proper cessation efforts, nicotine addicts have limited options in the current climate. This combination of limited enforcement and restricted access to alternatives has unintentionally strengthened the illicit market, undermining the intended goals of the policy.
Other nations have shown how a more holistic framework works. The UK’s approach is based on a strong public health framework with integrated cessation support that promotes vaping as a significantly less harmful alternative. New Zealand also provides strong cessation support and regulates vapes to ensure a quality and safe alternative. Their lesson is clear: tax policy succeeds when enforcement and support systems are equally robust. Easier access to less hazardous alternatives can complement public health goals more effectively than investing solely in restrictive or cessation measures.
For Maldives, the first year of reform reveals both progress and pitfalls. The tax may have discouraged some smokers, but it also exposed weak enforcement and poor coordination between health and fiscal agencies. In a nation spread across more than 1,200 islands, even a major increase in enforcement resources would make little difference to the size of the black market. These geographic realities make full control nearly impossible, highlighting the need for a more balanced approach. Policymakers could explore fairer taxation and better regulation for alternatives such as heated tobacco and nicotine puches as part of a broader, pragmatic framework.
The challenge ahead is to match fiscal resolve with public accountability. After all, real success of the cigarette tax will not be measured in revenue alone, but in how effectively it enables safer, healthier choices and curbs the underground market.
