Vietnam’s health ministry proposes higher tobacco tax to reduce smoking among youth

Vietnam's Ministry of Health has proposed a higher fixed tax rate on cigarettes in the hope of reducing the numbers of adolescence smokers, from a proposed VND1,000 to VND2,000-5,000.

During a workshop on Tobacco Taxation organized by Oxfam on May 8, Deputy Director of the Tobacco Control Fund Phan Thi Hai said that a higher tax rate will increase government funds. “It will also prevent adolescents and poor people from purchasing more cigarettes.”

The idea follows a proposal by the Ministry of Finance proposed that offered two options for taxing tobacco in the amended Tax Administration Law.

The first option would be a combination of a special consumption percentage tax and a fixed tax. So a 20-pack of cigarettes would cost an additional VND1,000 (4.40 cents) in fixed tax, and each cigar VND1,500.

Option two is increasing the special consumption tax each year until it reaches up to 85 percent in 2021.

Health officials are supporting the first option, but said the fixed tax should be VND2,000-5,000.

Special consumption tax on tobacco in Vietnam is calculated on the warehouse price, which is roughly 35 percent of the retail price, compared to the world’s average rate of 59 percent, according to World Health Organization statistics from 2017. It is also much lower than Thailand’s 75 percent, Brunei’s 81 percent and Malaysia’s 57 percent. This has made Vietnam one of the cheapest countries in Asia Pacific to buy cigarettes.

There are 16 million smokers in Vietnam, while there are 33 million non-smokers who inhale secondary smoke at home. Tobacco smoke contains more than 7,000 chemicals. Cigarettes cause 25 types of diseases, such as cancer and cardiovascular diseases. About 100 million people worldwide were killed by tobacco-related diseases in the 20th century. Each year, tobacco causes nearly six million deaths, and that could rise to eight million in 2020.