Proposal to add absolute tax rate on tobacco products, increase by 5,000 VND/pack

According to the Director of the Institute of Strategy and Financial Policy ( Ministry of Finance ), although many measures and action programs have been implemented, including increasing the special consumption tax rate (SCT) according to the roadmap in 2016 and 2019, the results have not been high. The rate of tobacco users has only decreased modestly, from 47.4% of male smokers in 2010 to 45.3% in 2015 and about 42.7% in 2022.

One of the main reasons is that Vietnam's cigarette prices are generally low, currently ranking 157th out of 161 countries (according to WHO's assessment). According to the current Law, the excise tax rate on cigarettes in Vietnam is 75% of the manufacturer's selling price; however, total consumption taxes only account for about 38-39% of the retail price of cigarettes in Vietnam, much lower than the average of middle-income countries (59%) and most ASEAN countries (about 60-70%).

The Ministry of Finance proposes to apply mixed tax and add absolute tax rate to tobacco products (Illustration photo).

Implementing the National Assembly 's law and ordinance development program for 2024 and 2025, the Ministry of Finance has conducted research to develop the draft Law on Special Consumption Tax (amended). Accordingly, the Ministry of Finance proposed to apply a mixed tax, including a relative tax (also known as a percentage tax) remaining at 75%, while adding an absolute tax rate according to the annual increase schedule from 2026 to 2030.

The Ministry of Finance proposed two options: Option 1 would increase by VND2,000/bag in the first year and reach an increase of VND10,000 by 2030. Option 2 would apply an increase of VND5,000/bag from 2026 and increase by VND1,000/bag in the next 5 years to reach VND10,000/bag in 2030. Of which, the Ministry of Finance proposed using option 2.

Experts say that amending the Law on Special Consumption Tax on Tobacco is necessary to properly implement the Party and State's policy on caring for and improving people's health, in line with international practices, and stabilizing state budget revenue.

Source: https://congthuong.vn/de-xuat-bo-sung-muc-thue-tuyet-doi-voi-mat-hang-thuoc-la-tang-5000-dongbao-332627.html