Tax hikes to fight tobacco’s harmful effects

The Ministry of Information and Communications, in collaboration with the NGO HealthBridge Vietnam, organised a workshop in Hanoi on August 13 to provide information on the harmful effects of tobacco and the role of tax policies in preventing tobacco-related harm.

At the event, the World Bank and World Health Organization (WHO) suggested that pricing and tax policies are among the most effective solutions to control tobacco consumption.

The Ministry of Finance has been seeking feedback on draft amendments to the Law on Special Consumption Tax (SCT), which is set to be presented to the National Assembly (NA) for discussion at the eighth session in October and for approval at the ninth session next May.

The draft maintains the current 75 per cent tax rate but adds an absolute tax amount with annual increases scheduled from 2026 to 2030, proposing two options. Specifically, option one would increase tax by VND2,000 (8 US cent) per pack in the first year, reaching VND8,000 (40 US cents) by 2030. Option 2 would apply an increase of VND4,000 (20 US cents) per pack from 2026 and progressively increase by VND1,000 (4 US cents) per pack over the next five years to reach VND10,000 (40 US cents) per pack by 2030.

Representatives from the Ministry of Health also gave the thumbs up to the Ministry of Finance on several proposals in the draft amendment to the SCT law. These aim to institutionalise and implement NA and government resolutions, especially the Party's Resolution No.20-NQ/TW dated October 2017 on continuing to protect, care for, and improve people's health.

With the SCT law under revision, the WHO believes Vietnam has a unique opportunity to aim for higher goals and achieve even more benefits for public health.

At the workshop, experts refuted claims that tax increases lead to higher unemployment rates. "Employment in the tobacco industry only accounts for 0.39 per cent to 0.42 per cent of total jobs in the economy. While tax hikes may reduce employment in the tobacco sector, they shift job creation to other industries and professions. Moreover, the government gains additional revenue to reinvest in the economy, particularly in areas such as health and education. Unlike tobacco, these sectors boost the country's productivity and growth," Dao The Son, an economist, stated.

Tran Thi Nhi Thuy, head of the Legal Department under the MIC, said, "According to the WHO, smoking is among the top reasons behind death worldwide. Tobacco use causes eight million deaths annually. Despite initial efforts and results in preventing tobacco-related harm, Vietnam remains one of the 15 countries with the highest smoking rates among adult males globally and ranks third in the ASEAN region."

Each year, over 40,000 deaths in Vietnam are attributed to tobacco-related diseases. This figure is projected to rise to 70,000 annually by 2030, nearly four times the number of road traffic fatalities nationwide, if Vietnam fails to combat tobacco harm effectively.

Furthermore, tobacco use inflicts significant economic losses. Recent studies estimate the annual economic cost of tobacco use in Vietnam at $4.3 billion, equivalent to 1.14 per cent of GDP in 2022. This figure is five times larger than the tobacco tax revenue contribution to the national budget.

Dr. Angela Pratt, representative of the WHO in Vietnam, acknowledged that Vietnam had made some good progress in the fight against tobacco harm in the last decade. However, on current trends, Vietnam will not achieve the National Tobacco Control Strategy target of reducing smoking among men to below 36 per cent by 2030. According to the General Statistics Office, tobacco consumption in Vietnam is beginning to rise again. From 2022 to 2023, total cigarette production increased by more than 10 per cent. Stronger action is needed to reduce tobacco use in Vietnam to protect health and save lives.

"​​​​One of the biggest challenges we face is that tobacco in Vietnam is incredibly cheap – and has been more affordable over time as people’s incomes have increased, but tobacco prices haven’t. We need to change this. Increasing tobacco taxes is the fastest and most cost-effective way to achieve this," Pratt said.

WHO official urges tobacco tax, price hikes Representative of the World Health Organisation (WHO) in Vietnam Angela Pratt has called on the country to raise tobacco tax and prices, which are still among the world’s lowest.

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