Two weaknesses of Vietnam's tobacco tax system

Low tobacco tax, not taking into account all the factors; Vietnamese people's income increases much faster than the price of tobacco products, making tobacco increasingly affordable, are two weaknesses in Vietnam's tobacco tax system. Measures to increase taxes are needed to minimize the harmful effects of this product.

On the morning of June 3, the Press Department coordinated with the HealthBridge Organization in Vietnam to organize a workshop to provide information on preventing and combating the harmful effects of tobacco with the theme "Tobacco Tax and Sustainable Development".

Tobacco tax in Vietnam is too cheap, unable to prevent the harmful effects of tobacco

Speaking at the workshop, Mr. Dang Khac Loi, Deputy Director of the Press Department (Ministry of Culture, Sports and Tourism) said that each year, tobacco kills more than 8 million people, including nearly 7 million current and former smokers, and 1.3 million non-smokers who are passively exposed to other people's smoke. The number of people who die from tobacco is greater than the total number of people who die from HIV/AIDS, tuberculosis and malaria combined.

With more than 15 million smokers, Vietnam is suffering a huge health and economic burden, with more than 100,000 deaths each year due to active smoking and exposure to second-hand smoke. At the same time, medical costs and economic losses are estimated at VND108,000 billion per year, equivalent to about 1.1% of GDP. This is a threat to the country's economic and social development.

According to statistics from the Ministry of Culture, Sports and Tourism , from January 1 to May 31, there were more than 11,000 news/articles from press agencies informing about tobacco tax and harmful effects.

Over the past time, although the smoking rate among adult men in Vietnam has decreased from 47.4% in 2010 to 41.1% in 2021, this reduction is still modest. Vietnam is still among the 15 countries with the highest rate of adult men smoking in the world and ranks 3rd in the ASEAN region.

According to Deputy Director Dang Khac Loi, one of the main reasons for the slow decline in tobacco use is that tobacco prices are too cheap, due to low tobacco taxes. In 2022, the tax rate on retail tobacco prices in our country will only reach 36%, lower than the average of middle-income countries (59%), and among the lowest tax rates in the ASEAN region.

Analyzing the two weaknesses of Vietnam's tobacco tax system, Dr. Nguyen Tuan Lam (WHO Vietnam) also said that the price of a pack of the most popular brand of cigarettes in Vietnam is only about 0.9 USD/pack. With this price, the price of cigarettes in Vietnam ranks 15th, almost the lowest, among 19 countries in the Western Pacific region.

Dr. Nguyen Tuan Lam (WHO Vietnam) analyzed two weaknesses of the tobacco tax system.

A survey on cigarette retail prices conducted by the University of Public Health and HealthBridge Canada in Vietnam in 2023 showed that there are up to 40 cigarette brands on the market with retail prices under VND10,000/pack of 20 cigarettes, with many brands priced at only VND7,000 to VND8,000/pack of 20 cigarettes.

Master Dao The Son, an economic expert, said that for the past 9 years we have not increased tobacco taxes. Meanwhile, the current tobacco price is not taking into account many factors: negative external impacts (manufacturers and businesses do not have to bear the full burden); health costs to society; costs to the environment; negative internal impacts: consumers do not fully recognize them; future health costs.

Meanwhile, incomes in Vietnam have increased much faster than the price of tobacco products. With such low retail prices, tobacco is easily accessible to low-income people and new smokers, including children and adolescents.

Therefore, this expert emphasized, increasing special consumption tax helps reduce medical losses (currently at 1.14% of GDP) and environmental losses (currently at 1.04% of GDP). This does not reduce growth but changes the revenue structure in a fair direction.

Vietnam needs to act strongly and decisively.

The National Assembly will consider a proposal to increase tobacco taxes in Vietnam in the Law on Special Consumption Tax (amended) at this session.

According to Dr. Angela Pratt, Chief Representative of the World Health Organization in Vietnam, we call on lawmakers to act strongly for the health and development of Vietnam. The higher the tax increase, the greater the positive impact on health, and the more tax revenue is generated to reinvest in the Government's priorities to promote sustainable development.

"We recommend that in addition to the current tax rate of 75% of the factory price, an absolute tax should be imposed according to a roadmap to reach 15,000 VND per pack of cigarettes by 2030.

We need strong, drastic actions because at present, Vietnam is not on track to achieve the national target of reducing the smoking rate among men to below 36% by 2030. More alarmingly, data from the General Statistics Office shows that tobacco consumption in Vietnam is increasing again.

High taxes will encourage smokers to quit and discourage young people from starting to smoke,” said Dr Angela Pratt.

The workshop focused on three presentations from economic experts, experts from the World Health Organization, and the Ministry of Health to discuss: Reforming the special consumption tax on tobacco to improve health and sustainable development; Special consumption tax on tobacco - Fiscal policy supporting economic growth; The Ministry of Health's viewpoint on the Tobacco Tax in the draft Law on Special Consumption Tax (amended).

THIEN LAM

Source: https://nhandan.vn/hai-diem-yeu-cua-he-thong-thue-thuoc-la-viet-nam-post884183.html