HCMC to raise traffic fines, tobacco tax using new-found power: top leader

Vietnam’s legislators have granted Ho Chi Minh City more decision-making power and the first things it plans to do with its new-found autonomy is to raise traffic fines and tobacco taxes, its top leader has said.

The city’s Communist Party chief Nguyen Thien Nhan said at a meeting with his constituents on Tuesday that HCMC will increase taxes on certain “special” products like tobacco to discourage consumption and protect the environment. (Nhan is also an elected legislator.)

Nearly half of men aged 15 or older smoke in Vietnam, which currently imposes a 41 percent tax on tobacco products, a rate HCMC officials have dismissed as being too low to affect consumption.

Several traffic fines will also be increased as the current penalties fail to deter violators, Nhan said. But he stopped short of when the taxes will be raised and how much they will increase.

Last Friday, Vietnamese legislators agreed to give Ho Chi Minh City, the country’s economic hub, more power to boost its development.

The decision, which will take effect starting mid-January, will allow the city to raise special consumption and environmental protection taxes on certain products, though it will still have to consult the central government.

It will also allow the city to make its own decisions on areas such as land management, investment and public spending.

The city will be able to set special salaries for industry experts and scientists, and raise salaries in the public sector as it sees fit.

Ho Chi Minh City is among just 20 percent of cities and provinces in Vietnam that can cover their own expenditures and contribute to the national coffers. It was the largest moneymaker last year, earning more than VND306 trillion ($13.48 billion), up 12 percent from 2015 and contributing to 28 percent of the state budget, according to its finance department.

Meeting with Nhan on Tuesday, people expressed their concerns that exclusive policies will make the city a more attractive place and put it under greater pressure from migration.

The megacity is now packed with 13 million people, or 6,200 people per square kilometer; around a third of the population are migrants.

“It would be a disaster if the number rises to 15 million,” a local woman said.

Nhan said that urbanization is a trend and that HCMC is virtually unable to prevent migration.

He said the city has commenced a master plan to transform itself into a “smart city” with a better living environment, and that might be the best and only solution to deal with the wave of migrants.

The goal of this ambitious plan is to solve the problems the city is facing, including poor health, education and transport, pollution and weak public administration.

Workers will be offered basic services in terms of infrastructure to ensure a competitive edge in the global market, such as broadband internet, clean, stable and cheap energy, opportunities to study and affordable living space.

Nhan said the city will also cooperate with neighboring provinces to improve their farming sectors and secure a more stable living for the people there.

“Once people have secured a good income, they will stop rushing to the city,” he said.