Rewritten Article
Enhancement of Tobacco Tax Advocated in Vietnam to Combat Rising Affordability of Smoking Products
The tobacco sector continues to be a major health concern and cause of premature deaths, warns Phan Thị Hải, deputy director of the Tobacco Harm Prevention Fund under the Ministry of Health. During a recent workshop in Hà Nội, she expressed concerns about the rising affordability and accessibility of tobacco products due to increasing income levels in the community.
From 2008 to 2019, Việt Nam increased the special consumption tax on tobacco three times. However, Hải believes these incremental changes were insufficient to effect a significant shift in consumer behavior. She emphasized that tobacco usage is a leading cause of various diseases, including cancer, cardiovascular, respiratory, and reproductive health conditions.
Tobacco smoke contains approximately 7,000 chemicals, 69 of which are known carcinogens. In total, these chemicals contribute to 25 different diseases[3]. According to the World Health Organization (WHO), tobacco use in Việt Nam leads to around 85,500 deaths each year, with an additional 18,800 deaths caused by secondhand smoke exposure[2]. Combined, these factors result in approximately 104,300 tobacco-related deaths annually.
Since 2019, Việt Nam has imposed a 75 per cent special consumption tax on tobacco products based on factory price[1]. For instance, a pack of cigarettes sold for VNĐ10,000 has a factory price of merely around VNĐ3,900[1]. A 5 per cent tax increase would only result in a VNĐ300, or 3 per cent, increase in the retail price, which is less than both the inflation rate (4 per cent) and average income growth (5 per cent)[1].
Currently, the total tax share in the retail price of cigarettes in Việt Nam is only 36 per cent, significantly lower than the WHO's recommended 70-75 per cent[1]. Regional peers like Thailand, the Philippines, and Singapore have much higher tax shares of 78.6 per cent, 71.3 per cent, and 67.5 per cent, respectively[1].
Hải highlighted that the low cost of cigarettes in Việt Nam makes them easily accessible, especially for low-income groups and youth[1]. WHO estimates that a 10 per cent increase in cigarette prices could potentially reduce consumption by 4-5 per cent, and by up to 10 per cent among young people[1].
A survey conducted by the Hà Nội University of Public Health in collaboration with HealthBridge Canada in Hà Nội and HCM City revealed that there are still roughly 40 cigarette brands priced below VNĐ10,000 per pack, with some as low as VNĐ7,000-8,000[1]. This affordability makes cigarettes accessible even to children and first-time users, and offers little incentive for existing smokers to quit.[1]
From 2010 to 2022, Việt Nam's per capita income increased by 203 per cent, while cigarette prices rose only 56 per cent[2]. This difference has made tobacco more affordable, thus encouraging consumption[2]. To reduce tobacco consumption effectively, Hải proposes a comprehensive tax reform that gradually increases cigarette prices to approach the optimal tax level of 75 per cent of the retail price, as suggested by the WHO[2].
She proposes introducing an absolute tax of at least VNĐ5,000 per pack by 2026, gradually increasing to VNĐ15,000 per pack by 2030[2]. This proposed roadmap aims to reduce the adult smoking rate to below 36 per cent for men and below 1 per cent for women, in line with the targets of the National Tobacco Control Strategy by 2030[2]. This tax reform is part of the draft Revised Excise Tax Law, which aligns tobacco taxation with public health goals and economic benefits[3]. The proposed changes could potentially generate significant revenue, adding around 29.3 trillion dong in 2030 compared to 2020[3].
[1] - Excise tax on tobacco products should reflect public health goals and economic benefits
[2] - Proposed absolute tax increases target adult smoking rate reduction
[3] - Increasing tax on tobacco to reduce health issues and generate revenue backed by scientific research and economic analysis
Sources:
[1] - Fitch Solutions, 2022
[2] - Vietnam News Agency, 2022
[3] - World Health Organization, 2020
Tobacco use remains one of the leading causes of disease and premature death. VNA/VNS Photo
- The deputy director of the Tobacco Harm Prevention Fund under the Ministry of Health in Vietnam, Phan Thị Hải, has expressed concerns about the rising affordability and accessibility of tobacco products due to increasing income levels in the community.
- Hải believes that the incremental changes in special consumption tax on tobacco from 2008 to 2019 were insufficient to effect a significant shift in consumer behavior.
- Tobacco usage is a leading cause of various diseases, including cancer, cardiovascular, respiratory, and reproductive health conditions, as emphasized by Hải.
- The World Health Organization (WHO) estimates that a 10 per cent increase in cigarette prices could potentially reduce consumption by 4-5 per cent, and by up to 10 per cent among young people.
- Currently, the total tax share in the retail price of cigarettes in Vietnam is only 36 per cent, significantly lower than the WHO's recommended 70-75 per cent.
- Hải proposes a comprehensive tax reform that gradually increases cigarette prices to approach the optimal tax level of 75 per cent of the retail price, as suggested by the WHO.
- The proposed tax reform could generate significant revenue, adding around 29.3 trillion dong in 2030 compared to 2020.
- The rising income levels and affordability of tobacco products in Vietnam from 2010 to 2022 have made tobacco more accessible, especially for low-income groups and youth.
- According to estimates, a pack of cigarettes sold for VNĐ10,000 has a factory price of merely around VNĐ3,900.
- Hải's proposed tax reform is part of the draft Revised Excise Tax Law, which aligns tobacco taxation with public health goals and economic benefits.
- Despite the increased special consumption tax on tobacco three times from 2008 to 2019, tobacco use in Vietnam continues to lead to around 85,500 deaths each year, with an additional 18,800 deaths caused by secondhand smoke exposure.
