Vietnam eyes cigarette tax hike to reduce smoking

By Le Nga   March 5, 2023 | 05:30 am PT
Vietnam eyes cigarette tax hike to reduce smoking
A pack of Marlboro cigarettes in a coffee house in Vienna, Austria, May 12, 2017. Photo by Reuters/Leonhard Foeger
The Ministry of Finance in a draft bill wants the special consumption tax on cigarette be increased to reduce consumption.

The tax, currently accounts for 75% of factory price, only accounts for 38.85% of retail price, it said.

This is far below the 70% of retail price tax that the World Health Organization recommends.

Vietnam’s special consumption tax on cigarette is nearly lowest in ASEAN, only higher than Cambodia, Laos and Myanmar.

Brunei’s tax on retail price is 81%, while that of Thailand is 70% and of Singapore is 69%. Developer countries such as France impose an 80% tax, and Germany 75%.

Although Vietnam’s special consumption tax has been rising, in recent years the ratio of people smoking remain high.

In 2020, over 42% of men smoke, while the target is to bring it down to 37% by 2025 and 32.5% by 2030.

"Smoking needs to be controlled more as the hikes of special consumption tax have not achieved smoking reduction targets," the ministry said.

It is therefore looking to hike the tax and add more taxes to reduce the purchase of low-quality and low-priced cigarettes.

WHO Representative in Vietnam Angela Pratt said that the country needs to make a stronger effort to reduce smoking, and hiking cigarettes tax is one of the most cost-effective solutions.

Cigarette prices in Vietnam are too low and prices are not a problem for young people in developing smoking habit, she said.

Dao The Son, a lecturer at Thuongmai University, said that some countries often change from ratio tax to absolute tax or a combination of the two to reduce cigarette consumption.

A single absolute tax on all types of cigarettes will prevent smokers from switching from an expensive type to a cheaper one.

An WHO report found that the number of countries imposing ratio tax on cigarettes dropped from 57 in 2008 to 42 in 2018, while that of countries that impose a combination of taxes increase from 48 to 63 in the period.

Most countries in Southeast Asia impose either absolute tax or a combination of taxes. Six countries that impose absolute tax are Brunei, Indonesia, Malaysia, the Philippines, Singapore and Malaysia. Laos and Thailand impose a combination of taxes. Only Vietnam and Cambodia impose ratio tax.

Nguyen Thi Thu Huong, representative of the Tobacco Control Fund under the Ministry of Health, said that smoking is the cause of over 40,000 deaths in Vietnam every year.

21% of male deaths are related to smoking. 25 diseases such as stroke or lung cancer are among the top causes of death in Vietnam.

At the end of last year the health ministry banned e-cigarette due to its high risks of damaging people’s health.

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