Increasing tobacco taxes will contribute to improving workers' health, thereby increasing productivity, reducing medical costs, creating conditions for increasing spending on education, and increasing savings for investment and business activities.
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| Increasing excise taxes is a key and effective strategy to reduce tobacco consumption. |
The latest report by the World Health Organization in 2024 shows that the estimated medical and economic costs caused by tobacco in Vietnam will reach VND108 trillion, equivalent to 1.14% of GDP in 2022, 5 times higher than the contribution of tobacco tax revenue to the national budget...
Raising tobacco taxes is protecting public health
Smoking is the leading cause of serious diseases such as lung cancer, cardiovascular disease and respiratory diseases. According to the World Health Organization (WHO), by 2024, the estimated medical and economic costs caused by tobacco in Vietnam will reach VND108 trillion, equivalent to 1.14% of GDP in 2022, 5 times higher than the contribution of tobacco tax revenue to the national budget. This places a heavy burden on the public health system, reduces labor productivity and negatively affects social life.
In 2025, Vietnam sets a very high growth target, which is both a driving force for reform, but also faces many difficulties and challenges in making the most important decisions, especially in the context of the current post-pandemic and global economic downturn.
In addition to its ambitious economic development goals, Vietnam is also a country with strong commitments to implementing sustainable development goals through the promulgation of sustainable development strategies, such as the Vietnam Sustainable Development Strategy 2004, the Vietnam Sustainable Development Strategy for the 2011-2020 period, and the National Action Plan to implement the 2030 Agenda for Sustainable Development.
Excise tax is not only a fiscal tool but also an important measure to regulate consumer behavior, reduce dependence on harmful products and encourage people to switch to healthier consumption choices.
This is not only beneficial to public health but also creates conditions for other manufacturing and service industries to develop, thereby contributing to sustainable economic growth.
By reducing tobacco consumption through tax increases, governments can reduce the burden of health costs on the country, allowing resources to be used more efficiently for other development goals.
One of the important goals of increasing tobacco taxes is to protect public health, reduce smoking rates and tobacco-related diseases. Public health is an important factor in the sustainable development of the economy. When public health is protected, medical costs will be reduced, workers will be healthier and more productive, contributing to long-term economic development.
At a recent workshop organized by the Center for Economic and Strategic Studies (VESS), Mr. Dao The Son, International Union Against Tuberculosis and Lung Disease, said that if taxes are increased, the number of smokers will decrease, thereby improving health and the workforce. In the case of no tax increase, from now until 2030, Vietnam will have 2.46 million more smokers. When cigarette prices increase, the accessibility of these groups will decrease, thereby helping to limit the number of smokers and reduce the incidence of related diseases.
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| Mr. Nguyen Anh Duong, Head of General Research Department - Central Institute for Economic Management, spoke. |
Increasing excise tax is a key and effective strategy to reduce tobacco consumption.
WHO calculations show that, with option 2 proposed by the Ministry of Finance in the draft Law on Special Consumption Tax, if in 2026 the tax rate is 75% plus an absolute tax rate of VND 5,000/pack, each year after that the absolute tax rate increases by VND 1,000/pack and by 2030, the tax increases to VND 10,000/pack, it will help reduce the rate of adult smokers by 2.9 percentage points in 2030 compared to 2020 and contribute an additional VND 21.8 trillion to increase budget revenue.
However, according to WHO calculations, to achieve the goal of the National Strategy on Tobacco Harm Prevention, in addition to the 75% tax rate, the absolute tax rate required to be applied until 2030 is 15,000 VND/pack and the state budget can increase revenue by 29 trillion VND.
While tobacco companies have consistently sought to delay tax increases, arguing that they could increase cigarette smuggling, statistics show that illicit cigarette consumption in Vietnam has declined from 20.7% in 2012 to 13.7% in 2017, which is attributed to stronger anti-smuggling enforcement efforts.
This is also one of the periods when Vietnam has adjusted to increase the special consumption tax on tobacco products. Delaying the tax increase will further aggravate the smoking situation in Vietnam, especially for the youth group when the Resolution on banning electronic cigarettes/heated tobacco products has been issued by the National Assembly, increasing the special consumption tax on traditional tobacco products is necessary to prevent the increase in smoking rates.
Raising tobacco taxes is part of a sustainable development strategy where policies focus not only on short-term economic growth but also on long-term social protection and development.
Simulation scenarios of the impact of increasing excise tax on tobacco products conducted by a research team from the Central Institute for Economic Management (CIEM) all show that increasing excise tax revenue from tobacco will ensure the ability to pay for new sustainable development initiatives (SDGs) and especially help reduce the poverty rate and reduce income inequality.
A country with a healthy community will have a stronger economy, so raising tobacco taxes is a step in the right direction in promoting sustainable development.
Mr. Nguyen Anh Duong, Head of the General Research Department, Central Institute for Economic Management (CIEM) said that Vietnam needs to firmly believe that increasing special consumption tax is a key and effective strategy to reduce tobacco consumption, especially among low-income people and children.
Increasing tobacco taxes will help improve workers’ health, thereby increasing productivity, reducing healthcare costs, creating conditions for increased spending on education, and increasing savings for investment and business activities. In addition, revenues from increasing tobacco taxes will also help supplement resources for the State to implement sustainable economic development programs, including reducing poverty rates and income inequality.
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