Proposal of high increase in tobacco tax is supported

VCN- To achieve the national goal of reducing smoking rates as well as reducing the economic and health burdens of tobacco use, contributing to increased revenue, tobacco tax policies should be reformed in a way that rewards them with Absolute additional taxes next to the current rate, at 5000 VND per pack.
proposal of high increase in tobacco tax is supported
Illustrated photo

This is the recommendation of many experts at the workshop on information on tobacco harm reduction, focusing on the solution to raise taxes in tobacco prevention by HealthBridge Canada held on 25/9.

Increase 10%, decrease consumption 5%

According to HealthBridge Canada, Vietnam is a country with high tobacco consumption, third in the ASEAN region and 9th in the world in terms of smoking. On average, two out of every adult male is a smoker; the prevalence of smoking among adolescents (15-24 years) is 24.3%. Vietnam has been suffering a huge economic burden due to the use of tobacco. By 2015, the total amount of cigarettes consumed by Vietnamese people will amount to 31 trillion dong (GATS 2015). Therefore, raising special consumption tax to increase tobacco prices is an effective solution, accounting for 60% of the total, in order to reduce the purchasing power of tobacco and prevent tobacco-related illnesses and deaths. According to the World Health Organization (WHO) and the World Bank, raising taxes at a rate of up to 10% for real cigarettes will reduce tobacco consumption by 5% in developing countries, and reduce tobacco consumption to 10% in children and the poor. Experts advise to reach a national target for reducing smoking rates as well as reducing the economic and health burdens of tobacco use, while contributing to increased tax revenues and drug tax policies. Tax policy of tobacco should be reformed in the direction of absolute additional tax rate next to the current rate of 5,000 VND / bag. At that time, it will reduce the rate of smoking in men from 45.3% (2015) to 39.0% (2020) and help to prevent 900,000 premature deaths in the future. Proposed increase at least 5,000 VND / pack In the draft Law on Amendments and Supplements to a number of articles of the Law on Value Added Tax, the Law on Special Sales Tax, the Law on Corporate Income Tax, the Law on Personal Income Tax, the Ministry of Finance proposed the application of the combined special consumption tax, In addition to the current rate schedule, the absolute tax allowance is VND 1,000 / cigarette pack of 20 cigarettes; VND 15,000 / cigar. According to the World Health Organization, the proposed 1,000 VND supplemental tax allowance as proposed above has the effect of reducing the smoking rate by 1.5% and raising the state budget to 3,949 billion VND. However, this will only help achieve one-fourth of the national target for reducing smoking rates by 2020. The model estimates that in order to reach the national target for reducing smoking rates, for VND 5,000 / pack. At that time, the rate of smoking among men may decrease by 6.3%, reaching the National Strategy for Tobacco Control until 2020, increasing tobacco sales by 10,700 billion VND per year and helping to avoid 900,000 premature deaths from smoking. Representative of the Tobacco Control Fund, Ministry of Health said the Ministry of Health supports the proposal to increase the excise tax on cigarettes with the absolute plan of the Ministry of Finance, because the absolute tax has an impact on the selling price certainly, avoiding price shifting of producers, reducing the price gap between tobacco products, reducing super-cheap tobacco products, positively impacting on health objectives of community, specifically reducing the incidence of smoking and effective in preventing tobacco use among teens and low-income people. However, the Ministry of Health proposes that the exercise tax with cigarettes should be raised to at least VND 5,000 / pack of cigarettes in order to significantly reduce smoking rates, achieving the National Strategy on prevention of harmful effect of tobacco until 2020.

Remarkably, according to HealthBridge Canada, community survey results also show that the proposal to increase tobacco taxes is supported by the public. According to a study conducted by Vital Strategy in Hanoi and Ho Chi Minh City in 1/2018, 94% of non-smokers reported that cigarette taxes should increase by at least 5,000 VND / pack. Non-smokers also have 57% support for an increase in cigarette tax of at least 5,000 VND. Another a study by the University of Commerce in conjunction with HealthBridge Canada, they conducted a survey of nearly 600 young people aged 13 to 24, suggesting that most young people are currently evaluating tobacco prices at cheap and average level (76.2%) and support for tax increases to increase tobacco prices (83.5%).

Addressing the problem of increasing tobacco tax and smuggling, Dr. Nguyen Ngoc Anh, Director of the Center for Policy Research and Development (DEPOCEN), shared the results of research on tobacco smuggling in three provinces in North, Central and South Vietnam. Manufacturers of cigarettes offer that illegal cigarettes evade taxes and therefore are cheaper; that raising domestic cigarette taxes will increase smuggling is not correct. The study results show that there is a significant reduction in the proportion of illegal cigarettes in Vietnam in 2012 (20.7%) and 2017 (13.6%), even in this period Vietnam has increased tobacco taxes (in 2016). In addition, the most popular cigarettes in Vietnam were discovered, including Hero, Jet, 555, Esse, and Craven A. In particular, Hero and Jet made up the bulk of the smuggled cigarettes market (84, 9% in 2012 and 83.6% in 2017); these are two brands of non-domestic cigarettes.

In terms of price, the study found that illegal cigarettes cost significantly higher than legal cigarettes. This clearly reflects the use of illegal cigarettes in Vietnam as a consumer, rather than a price issue. The results also coincide with the findings of the World Health Organization in 76 countries. Accordingly, countries with lower tobacco prices have smuggling more than those with higher prices and taxes. In addition, many countries have successfully controlled smuggling of cigarettes at the same time as raising taxes and selling cigarettes.

ByThuỳ Linh/Bui Diep

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