Increase special consumption tax on tobacco and alcohol

ANTD.VN - The Ministry of Finance has proposed adjusting the special consumption tax rate on some items harmful to health such as cigarettes and alcohol to limit their use.

The Ministry of Finance is seeking the Ministry of Justice's opinion on the Government's submission to the proposal to develop a draft Law on Special Consumption Tax. It proposes to increase tax rates on items harmful to health such as tobacco and alcohol.

Increase taxes, apply mixed tax calculation method to tobacco

The Ministry of Finance proposes to study and supplement the application of absolute tax and the application of mixed tax calculation methods (proportional tax rates and absolute tax rates) on tobacco products.

According to the drafting agency, the World Health Organization (WHO) survey report shows that about 90% of countries apply special consumption tax on tobacco and. The trend is that more and more countries apply mixed taxes on this item (from 48 countries in 2008 to 61 countries in 2016).

The application of the mixed tax calculation method will ensure an effective special consumption tax policy with the goal of increasing prices, contributing to reducing the consumption of cheap tobacco products (products with many risks and harmful effects on health compared to high-end cigarettes); at the same time, limiting the access of young people, new smokers who often access cigarettes starting with low-priced cigarettes.

According to the Ministry of Finance, countries should increase the application of absolute taxes and mixed taxes and attach conditions on periodic tax increases at or above the rate of inflation and growth to ensure that cigarette prices increase at or above the rate of increase in income and purchasing power of smokers.

Therefore, it is necessary to amend the tax calculation method for this item according to the mixed method to increase the effectiveness of the special consumption tax policy and to conform to the world's reform trend.

Special consumption tax on tobacco products expected to increase sharply

Not only that, the Ministry of Finance also proposed to increase taxes on cigarettes. The reason is that currently, the selling price of cigarettes in Vietnam is still low because the tax rate on retail price is only about 38.85%, while other countries are much higher. For example, Brunei is 81%, Thailand is 70%, Singapore is 69%, Malaysia is 51%... and developed countries such as Australia are 62%, Germany is 75%, France is 80%...

Notably, the draft also proposes to add new tobacco products and new tobacco equipment, parts, and solutions to the taxable list.

The reason is that e-cigarettes, heated tobacco products and shisha all contain toxic ingredients that are harmful to smokers and those around them, just like traditional cigarettes (according to WHO, Ministry of Health).

Although the special consumption tax rate on tobacco products has increased according to the roadmap from 2016 - 2019, the smoking rate in Vietnam remains high (decreased from 45.3% in 2010 to 42.3% in 2020 but has not yet achieved the target of reducing to 37% by 2020).

“Thus, tobacco use needs to be further controlled and the roadmap for increasing special consumption tax in the past has not yet achieved the goal of reducing use as set out,” said the Ministry of Finance.

Increase tax on alcohol and beer

The Ministry of Finance said that although the special consumption tax rate on beer and wine has increased according to the roadmap from 2016 to 2018, the consumption of alcohol in Vietnam remains high and tends to increase rapidly.

Vietnam is one of the countries with the highest rate of alcohol consumption.

Specifically, Vietnam is the country with the highest beer consumption in Southeast Asia and the third in Asia, after Japan and China. In 2019, the average beer consumption per person was 47.6 liters, 1.2 times higher than in 2015. White wine and spirits were 3.4 liters, 1.02 times higher than in 2015.

Alcohol ranks 5th in the top 15 health risk factors and causes many serious social consequences, including: traffic accidents, injuries, domestic violence, loss of security and order, and increasing the gap between rich and poor. Alcohol is also one of the 3 causes of increasing traffic accident rates among men aged 15-49, so the use of alcohol needs to be controlled.

According to WHO, tax policy is one of the most effective measures to control the harmful effects of alcohol, beer, and reduce the burden of disease and death caused by alcohol.

Many countries in the world also apply special consumption tax on alcoholic beverages. Meanwhile, currently, alcohol tax in Vietnam is still low, accounting for only 30% of the retail price, while in many countries it accounts for 40-85%.

Therefore, the Ministry of Finance believes that it is necessary to continue studying and increasing the special consumption tax rate on this item, ensuring that the increase in alcohol prices after adjustment must keep up with the increase in income and inflation.

Source link: https://www.anninhthudo.vn/tang-thue-tieu-thu-dac-biet-voi-thuoc-la-ruou-bia-post539915.antd