Proposal to impose a tax of 15,000 VND per pack of cigarettes.

Between 2008 and 2019, Vietnam increased the excise tax on tobacco three times, but the increase each time was relatively small. The intervals between increases were quite long: In 2008, the tax rate increased from 55% to 65%; eight years later, in 2016, it increased from 65% to 70%; and three years after that, in 2019, it increased from 70% to 75%.

Despite a 75% excise tax, the total tax on the retail price only accounts for 38.8%. Vietnam remains among the countries with the lowest tobacco taxes and prices in the world , lower than the average of ASEAN countries (cigarette prices in Vietnam are half that of Thailand, only higher than Laos and Cambodia).

"The price of a pack of the most popular cigarettes in Vietnam is currently less than 1 USD, which is half the average price in the group of countries with the lowest cigarette prices in the Western Pacific region," Ms. Thuy informed.

According to Ms. Thuy, taxes and prices on cigarettes in Vietnam are currently very low, leading to easy access and purchase of cigarettes by the general public and children.

"According to the 2023 survey on retail cigarette prices in Hanoi and Ho Chi Minh City, there are about 40 brands of cigarettes on the market priced under 10,000 VND per pack. Meanwhile, parents spend 20,000-30,000 VND on breakfast for their children. Children might spend 10,000 VND on sticky rice and the rest on cigarettes," Ms. Thuy said.

Increasing taxes and prices on tobacco products is considered a crucial solution, contributing approximately 60% to the effectiveness in reducing tobacco use rates.

In its comments on the draft Law on Special Consumption Tax (amended), the Ministry of Finance proposed two options for adjusting the tax rate on tobacco products: maintaining the current tax rate of 75% and adding an absolute tax rate with a phased increase each year during the period 2026-2030.

Option 1 proposes an increase of 2,000 VND/bag in the first year, reaching 10,000 VND/bag by 2030. Option 2 proposes an increase of 5,000 VND/bag starting in 2026, with a progressive increase of 1,000 VND/bag over the next five years, reaching 10,000 VND/bag in 2030.

Meanwhile, the Tobacco Association only proposed an increase of 1,000 VND/pack in 2025, and only an increase of 3,000 VND/pack by 2030.

"Increasing the price of cigarettes by 1,000 VND per pack is insufficient to offset current inflation. Some popular brands cost 10,000 VND per pack; even with an additional tax of 1,000 VND per pack, the retail price would only be 11,000 VND per pack. This increase is insignificant and will not change the demand for cigarettes," commented a leader from the Legal Department (Ministry of Health).

Dr. Angela Pratt, Head of the World Health Organization (WHO) Representative Office in Vietnam, noted that the Ministry of Finance's proposal to increase taxes is a step in the right direction but not enough. To achieve the goal of reducing smoking rates, WHO recommends a more aggressive approach: increasing the excise tax starting from VND 5,000/pack to VND 15,000/pack by 2030, plus a product tax equal to 75% of the current ex-factory price.

Expected results: A relative 13% reduction in smoking rates, estimated to decrease by approximately 696,000 smokers by 2030 compared to 2020; an additional VND 29.3 trillion in tobacco tax revenue per year compared to 2020.

“The Ministry of Health proposes that the absolute tax rate should reach 15,000 VND/pack (20 cigarettes) by 2030, in addition to the 75% proportional tax. This plan will help achieve a tax rate of 65% of the retail price, close to the WHO recommendation, helping to reduce the rate of tobacco use among men to 36% by 2030,” Ms. Thuy emphasized.

According to the WHO, Vietnam remains one of the top 15 countries with the highest rates of adult male smoking in the world, ranking third in the ASEAN region. It is estimated that 40,000-70,000 premature deaths occur annually due to tobacco use.

How expensive will cigarettes become with the increase in excise tax? The Ministry of Finance proposes imposing an excise tax on cigarettes, adding an absolute tax rate according to a phased increase schedule from 2026 to 2030. Cigarette prices will also increase over the next two years, while cigarette smuggling is likely to become more complex.