WHO wants Vietnam to raise tobacco taxes

Vietnam should raise its tobacco tax in order to deter and reduce people smoking, the World Health Organisation has advised.

WHO head Kidong Park said at a recent meeting held by the Health Ministry in Hanoi that Vietnam was among the top 15 countries in the world with the lowest tobacco prices.

He said Vietnam’s current tobacco tax only accounts for 35 percent of a cigarette pack’s retail price, which is lower than the world’s average of 56 percent. In comparison, corresponding tax rates in Thailand, Brunei and Malaysia are 75, 81 and 57 percent respectively.

Park said that in order to reach the government’s target of reducing the number of smokers among Vietnamese males from 47 to 39 percent by 2020, the country would need to raise its tobacco taxes by a fixed tax rate of at least VND2,000 per packet. VND5,000 per packet would be better, he added.

The Finance Ministry had previously proposed two tobacco taxing options for inclusion in the Tax Administration Law – to apply an additional fixed tax rate for each cigarette pack, or incrementally increase the special consumption tax on tobacco each year until it reaches 85 percent in 2021.

Under the first option, a 20-cigarette pack would cost an additional VND1,000, and each cigar, VND1,500.

The Ministry of Health is currently leaning towards the first option, but has suggested an increase of VND2000 or VND5000 per pack, saying VND1,000 is too low.

At a workshop on Tobacco Taxation organized by Oxfam early last month, Deputy Director of the Tobacco Control Fund, Phan Thi Hai, said higher tax rates would not only increase government revenue, but also “prevent adolescents and poor people from purchasing more cigarettes.”

Vietnam has one of the world’s highest populations of smokers. It is estimated that 15.6 million Vietnamese smokers spend VND31 trillion ($1.36 billion) on cigarettes every year, which promotes trade in contraband tobacco.

Smoking is a major cause of lung cancer and cardiovascular diseases that costs Vietnam VND23 trillion (more than $1 billion) in treatment and labor loss every year, according to the health ministry.