Gov't to raise tax on tobacco products

The Government is planning to increase the special consumption tax imposed on tobacco products to raise income for the state budget and reduce the number of smokers. - Photolaodong

Deputy director of the Taxation Policy Department under the Ministry of Finance, Nguyen Van Tuan, said: "The Government has asked the National Congress to raise the tax imposed on tobacco products from 65 per cent to 70 per cent by the end of 2018 and to 75 per cent in 2019".

However, the Government should improve its efforts to prevent people from using smuggled products because it hit the State budget, Tuan said.

He predicted the draft law would help the Government claim VND154 trillion ($7.3 billion) in taxes for the State budget from 2015 to 2020.

Director of the Health Ministry's Medical Examination and Treatment Department, Luong Ngoc Khue, said that Viet Nam had one of the highest smoking populations in the world.

He said the Vietnamese spent VND 22 trillion (US$1.04 billion) on tobacco products in 2012 and VND 23 trillion ($1.09 billion) per year on curing diseases caused by smoking.

He said that the Government should increase the tax each year make tobacco products too expensive for Vietnamese people.

Khue said the Health Ministry planned to reduce the rate of smokers in Viet Nam from 47.4 per cent to 39 per cent by 2020.

In order to achieve that target, he said the Government should raise the tax imposed on tobacco products to 105 per cent by 2015, 145 per cent by 2018 and 155 per cent by 2020.

This would reduce the demand for smoking, he added.

However, an increase in tobacco taxes was not the major reason for the increase in tobacco smuggling in Viet Nam because the prices of smuggled products were 30 to 60 per cent higher than domestic products, the Health Ministry representative said.

The major reason for the problem was the difference in consumer demands, Khue said.

To stop tobacco smuggling, law enforcement at border areas needed to be tightened, and tobacco stores and anti-smuggling efforts needed to be monitored, he concluded.