With 15.6 million smokers (GATS 2015), Vietnam is among the 15 countries in the world with the highest number of smokers. Each year, the country has over 40,000 deaths related to diseases caused by tobacco.

Ms. Tran Thi Nhi Thuy, Director of the Legal Department - Ministry of Information and Communications spoke at the Workshop.

At the Workshop on Providing Information on the Harmful Effects of Tobacco and the Role of Tax Policy in Preventing the Harmful Effects of Tobacco, organized by the Ministry of Information and Communications in collaboration with HealthBridge on August 13, Ms. Tran Thi Nhi Thuy, Director of the Legal Department, Ministry of Information and Communications, once again emphasized the risks and harmful effects of tobacco on human health.

According to the World Health Organization, smoking is the leading cause of death. Cigarette smoke contains 69 substances that cause cancer, cardiovascular disease, respiratory disease and affect the reproductive health of both men and women. Tobacco use causes 8 million deaths each year worldwide.

In Vietnam, although we have made many efforts and achieved initial results in preventing and combating the harmful effects of tobacco, Vietnam is still one of the 15 countries with the highest rate of adult men smoking in the world and ranks 3rd in the ASEAN region.

Faced with the harmful effects on health and economic losses that smoking causes to individuals, families, society and the environment, Resolution No. 20-NQ/TW dated October 25, 2017 of the Party Central Committee on strengthening the protection, care and improvement of people's health in the new situation; Resolution 43/2022/QH15 dated January 11, 2022 of the National Assembly on the Socio-Economic Recovery and Development Program and directives of the Prime Minister have also identified the solution of "Increasing special consumption tax on goods harmful to health such as alcoholic beverages, carbonated drinks, and cigarettes to limit consumption".

On June 8, 2024, the National Assembly passed Resolution 129/2024/QH15 on the law and ordinance development program for 2025. Accordingly, the amended Law on Special Consumption Tax was included in the law and ordinance development program for 2025, submitted to the National Assembly for comments at the 8th session (October 2024) and approved at the 9th session (May 2025).

According to Ms. Thuy, the use of special consumption tax policy will affect awareness and tobacco consumption behavior, which is assessed on a number of aspects.

Accordingly, by increasing taxes on tobacco products, retail prices will increase, which may discourage consumers from buying them. High prices are particularly effective in preventing teenagers and low-income people from starting or continuing to smoke.

Higher prices may lead to reduced consumption among current smokers. Some may reduce the number of cigarettes they smoke, while others may quit smoking altogether.

High prices can act as a barrier to teens who might otherwise start smoking. Studies have shown that price increases are very effective in preventing teens from starting to smoke.

Currently, according to experts' assessment, the special consumption tax on tobacco in the draft revised Law on Special Consumption Tax is still low, the impact to better control tobacco consumption and contribute to protecting people's health has not been as expected.

It is known that in recent years, although the special consumption tax on tobacco products has been adjusted to increase tax rates in 2008, 2016 and 2019.

However, with low tax rate increases (5%-10% per increase), low tax base based on manufacturer/importer selling prices, and long time intervals between tax increases, the impact of tax increases on cigarette prices and tobacco use rates is insignificant.

Although the smoking rate among adult men has decreased from 47.4% in 2010 to 45.3% in 2015 and 41.1% in 2022, this decrease is still modest, the rate of male smokers remains high and does not meet the target set in the National Strategy for Tobacco Harm Prevention and Control by 2020.

Recent data released by the General Statistics Office shows that tobacco consumption in Vietnam is starting to increase again. From 2022 to 2023, total production increased by more than 10%, while cigarette prices in Vietnam are very cheap and almost unchanged.

In addition, because the annual increase in per capita income is higher than the increase in cigarette prices, the purchasing power of cigarettes is increasing.

The trend of falling real prices of cigarettes and increasing purchasing power of cigarettes over time is a matter of great concern because it increases the accessibility of cigarettes to people, especially the young and the poor. Therefore, excise taxes need to be increased sufficiently and regularly to have an effective impact on reducing consumption.

Recently, the Ministry of Finance has solicited comments on the draft Law on Special Consumption Tax (amended) to submit to the National Assembly for comments at the 8th session in October 2024 and to submit to the National Assembly for approval at the 9th session in May 2025.

The draft adjusts the tax rate on tobacco products in the direction of maintaining the tax rate of 75% and adding an absolute tax rate according to the roadmap of increasing each year in the period from 2026 - 2030 with 2 options.

Specifically, option 1 will increase by 2,000 VND/bag in the first year and reach an increase of 10,000 VND in 2030. Option 2 applies an increase of 5,000 VND/bag from 2026 and a progressive increase of 1,000 VND/bag in the next 5 years to reach 10,000 VND/bag in 2030.

According to Dr. Angela Pratt, Chief Representative of the World Health Organization (WHO) in Vietnam, the Ministry of Finance's proposal to increase taxes is a step in the right direction but not enough to achieve the National Strategy's goal of reducing smoking rates.

WHO recommends a higher option, according to which the special consumption tax should increase from 5,000 VND/pack to 15,000 VND/pack by 2030, plus a product tax of 75% of the current factory price.

The WHO recommended scenario would result in a 13% relative reduction in smoking prevalence. The smoking prevalence among men and women would fall below 36% and 1.0% respectively by 2030, thereby achieving the targets of the Vietnam National Strategy on Tobacco Control. This scenario would result in a significant reduction in the total number of smokers, estimated to be approximately 696,000 fewer in 2030 compared to 2020.

These levels would also increase real, inflation-adjusted, annual tax revenue by 169%, equivalent to an additional VND29.3 trillion per year in tobacco tax revenue compared to 2020.

In addition, Ms. Angela Pratt also clarified the false information about the increase in excise tax on tobacco. The WHO representative emphasized that the shock tax increase, which in turn increases the price of cigarettes, is not the cause of the worsening of the situation of cigarette smuggling. Evidence shows that many smokers of smuggled cigarettes are willing to pay more for brands that are not available in the country.

The most important factor in addressing the smuggling or illegal trade of cigarettes is the enforcement capacity and efforts of the authorities.

Furthermore, the argument that raising tobacco taxes increases unemployment is also incorrect. Employment in the tobacco industry accounts for only 0.39% to 0.42% of total employment in the economy.

Raising taxes may reduce tobacco employment but will increase employment elsewhere. In addition, the government will have more revenue to invest back into the economy – in areas such as health and education. And unlike tobacco, these areas will increase the country’s productivity and growth.

On the side of the Ministry of Health, sharing the same view with the World Health Organization, the Ministry of Health supports and fully agrees with the Ministry of Finance on a number of proposals in the draft Law on Special Consumption Tax (amended) to institutionalize and implement the Resolutions of the National Assembly and the Government, especially Resolution No. 20-NQ/TW of the Central Executive Committee of the Party on continuing to protect, care for and improve people's health in the new situation.

However, to ensure closer adherence to the Party and State's guiding viewpoints and orientations, and the requirements set forth in the National Strategy on Tobacco Harm Prevention attached to Decision No. 568/QD-TTg of the Prime Minister, the Ministry of Health proposes that the absolute tax rate on tobacco products must reach VND 15,000/pack (20 cigarettes/pack) by 2030 in addition to the tax rate of 75%.

This option would help achieve a tax rate of 65% of retail prices, close to the WHO recommendation (70-75% of retail prices), and help reduce tobacco use among men to 36% by 2030.