Increase on special consumption tax vital to reduce smoking

Volunteers join a campaign against the use of tobacco in central Da Nang City.-VNA/VNS Photo

Speaking at the conference on tax incentives to prevent tobacco harm on Tuesday morning, health experts said the application of the special consumption tax rate will reduce the tobacco use rate among men from 45.3 per cent to 39 per cent by 2020.

Currently, Vietnam has the world’s ninth-highest number of smokers. On average, one in every two male adults is smoker. The prevalence of smoking among adolescents is 24.3 per cent.

The country has been suffering the burden of disease and financial loss caused by tobacco use. In 2015, Vietnamese people spent up to VND31 trillion ($1.3 billion) on cigarettes and more VND24 trillion ($1.03 billion) on treatment of tobacco-related diseases such as lung cancer, respiratory and cardiovascular diseases, stroke and heart attack.

More than 40,000 tobacco-related deaths are reported each year in Việt Nam, and the number is estimated to increase to 70,000 by 2030, the World Health Organisation (WHO) has said.

Nguyen Tuan Lam, a WHO expert, said the tariff rate on the cigarette retail price in Việt Nam was about 36 per cent, much lower than that in other countries in the region, such as 73 per cent in Thailand, 66 per cent in Singapore, 62 per cent in Bruneiand the level of 70 per cent recommended by the WHO.

Due to the low tariff, Vietnam has a low retail price of cigarettes, he said.

Lam said the Ministry of Finance’s proposal on applying the absolute tax rate of VND1,000 ($0.04) per cigarette pack and VND15,000 per cigar since early January, 2020 would help reduce the rate of smokers by only 1.5 percentage points and bring more than VND3.9 billion ($167,700) to the State budget.

However, he said, to achieve the national target on reducing the rate of tobacco use by 6.3 percentage points by 2020, the absolute tax rate should be VND5,000 per pack. This would also bring VND10.7 trillion ($460 million) to the State budget.

Do Thi Phi, a representative from the Centre for Research and Community Development Services, said the results from a public survey implemented in Hanoi and HCM City this January showed that the proposal on increasing the special consumption tax rate on cigarettes received support from 94 per cent of participants.

Another survey implemented by the University of Commerce and HealthBridge Canada among 600 adolescents showed that 76.2 per cent said the tobacco price was cheap and 83.5 per cent agreed the tax on tobacco should be increased.

PhD Nguyen Ngoc Anh, director of the Development and Policies Research Centre, said many tobacco producers said the tax increase on domestic-produced tobacco would increase the smuggling of tobacco.

This assumption was not accurate as the price of smuggled tobacco was much higher than the domestic-produced products, he said. The consumption of smuggled tobacco is all about consumers’ taste, not about the prices. He cited imported cigarette Jet as an example. The branch occupied 83.6 per cent of the market last year, and its price was much higher than that of the domestic branches.

The conference was jointly held by the Ministry of Information and Communications and HealthBridge Canada.