Increasing Tobacco Tax: An Effective Measure To Reduce Disease Burden And Build A Sustainable Future

The Enormous Burden Of Tobacco: Why Vietnam Needs Immediate Action

Tobacco poses a serious threat globally and particularly in Vietnam.

• Over 8 million deaths annually worldwide are attributed to tobacco, with more than 1 million deaths due to secondhand smoke. This is an alarming figure, as 64% of passive smoking deaths are among women and 165,000 are children under five.
• In Vietnam, the situation is even more concerning: over 15 million smokers and more than 100,000 deaths annually from both active and passive smoking.
• The estimated economic damage amounts to 108 trillion VND per year (equivalent to 1.1% of GDP) from healthcare costs and reduced labor productivity. The WHO warns that this is a major threat to Vietnam’s socio-economic development.

Despite a decrease in smoking rates among adult males, Vietnam remains among the top 15 countries globally with the highest male smoking rates and ranks third in the ASEAN region. Crucially, the 15-55 age group, the primary workforce, is severely affected, leading to a loss of 21.8 million working hours annually. Tobacco consumption also reduces spending on education and essential needs, particularly in poor households, exacerbating economic inequality.

Increasing Tobacco Tax: A Key To Reducing Harm And Boosting National Revenue

Experts agree that Vietnam’s current special consumption tax (SCT) on tobacco is too low (only 36% of the retail price in 2022). This is significantly lower than the average of 59% in middle-income countries and among the lowest in the ASEAN region. This makes tobacco easily accessible, especially to children and adolescents. The WHO and the World Bank recommend that the proportion of tobacco tax should reach at least 75% of the retail price for maximum effectiveness.

Economist Dao The Son affirmed that increasing the SCT on tobacco is not just a health measure but also a crucial fiscal policy:

• Reducing the 108 trillion VND/year burden from tobacco-related diseases and deaths.
• Cutting environmental pollution costs from tobacco, which amount to 99 trillion VND/year.
• Improving labor productivity and resource utilization efficiency.
• Shifting household income from tobacco consumption to essential activities like education and healthcare, thereby promoting sustainable private sector development.

Proposed Tax Increase Scheme And Its Significant Benefits

The WHO recommends that Vietnam adopt a hybrid tax system, adding a specific tax rate to the current ad valorem tax:

• 5,000 VND per pack in 2026.
• Gradually increasing to 15,000 VND per pack by 2030.

This plan is expected to yield positive outcomes:

• Reduce smoking rates among men to below 36% and among women to below 1% by 2030.
• Decrease the number of smokers by approximately 696,000 people compared to 2020.
• Generate an additional 29 trillion VND in tobacco tax revenue by 2030.

Dr. Angela Pratt, WHO Representative in Vietnam, emphasized: “Increasing tobacco tax is one of the most effective measures to protect people and increase resources for national priorities.”

Dispelling Misconceptions About Tobacco Tax

Experts at the workshop refuted misleading concerns that increasing tobacco tax would lead to an increase in smuggling and unemployment.

• Smuggling is not primarily caused by high tobacco prices, but rather by ineffective enforcement and monitoring capabilities of authorities.
• Increasing tobacco prices does not reduce employment; instead, it shifts consumer spending to other products, stimulating production and creating more jobs in legal sectors such as agriculture, education, and healthcare.

Evidence has shown that when tobacco prices increase by 10%, consumption decreases by approximately 4% in developed countries and 5% in developing countries. Notably, among children and the poor, the reduction can be up to 10%, playing a crucial role in preventing adolescents from starting to smoke.

Vietnam stands at a golden opportunity to act for health and sustainable development. We must not delay in reforming tobacco taxes, as every year of delay means more losses in health, human resources, and the economy.