Tobacco Rep Asks Vietnam to Curb Smuggling Before Raising Taxes

The Vietnam Tobacco Association (VTA) has asked the government to delay raising the excise tax on tobacco until smuggling is “considerably” reduced, news website VnEconomy reported on Wednesday.

The association made its recommendation after both the Ministry of Finance and the Ministry of Health proposed increasing the tobacco tax to 105 percent of the per-pack retail price from the current 65 percent, saying that the move is needed to curb smoking in Vietnam.

Vu Van Tien, deputy director general of the Vietnam National Tobacco Corporation, was quoted at a recent press conference as saying that local businesses face huge problems caused by rampant smuggling.

Increasing the excise tax will only exacerbate smuggling given that Vietnamese people are all tightening their belts, he said.

The association, therefore, urged the government to order the Ministry of Industry and Trade, the Ministry of Finance to seriously take on tobacco smuggling.

Vu further suggested that the government consider ending its practice of exporting confiscated tobacco, claiming that the measure has yet to prove effective.

The practice began as a pilot project in August 2012 after local governments complained that they lacked the funds to seize and destroy smuggled tobacco. To offset those costs, the government allowed these localities to export high-quality tobacco that they’d seized from smugglers.

During its recent announcement, the trade association offered continued aid to relevant agencies in fighting tobacco smuggling by offering a bounty of VND3,500 for every pack of smuggled or counterfeit cigarettes seized by the local authorities.

Once tobacco smuggling falls “considerably,” the government can begin to consider a tax hike, according to the association, adding that the hike should be implemented “gradually.”

According to the finance ministry, there are 15 million smokers in Vietnam–more than 16.6 percent of the country’s population. Official figures show that smoking killed 40,000 people in Vietnam in 2008, and the death toll is expected to increase to 50,000 by 2023. Enditem