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Tobacco & alcohol SCT may increase

Released at: 11:10, 07/11/2014

Tobacco & alcohol SCT may increase

A proposal is before the NA to increase the special consumption tax on tobacco and alcohol.

by Huyen Thanh

The government is planning to increase the special consumption tax (SCT) rate imposed on tobacco products to raise income for the State budget and cut the number of smokers in the country. Vietnam’s tax rate on such products is the lowest in ASEAN and in the world.

Ranked among the world’s 15 leading tobacco consumers, 48 per cent of men and 1.4 per cent of women smoke, for 15 million in total. According to Mr. Nguyen Van Tuan, Deputy Director of the Taxation Policy Department under the Ministry of Finance, the government has asked the National Assembly (NA) to increase the SCT on tobacco product from 65 per cent in 2014 to 70 per cent in 2015 and 85 per cent in 2018.

The government should also improve its efforts to stop people smoking smuggled tobacco because it hits the State budget. Mr. Tuan predicted the draft law proposed by the Ministry of Health (MoH) would help the government claim VND154 trillion ($7.3 billion) in taxes for the State budget from 2015 to 2020.

A recent survey by the Health Strategy and Policy Institute found that the country spent about VND22 trillion ($1.04 million) in 2012 fighting diseases caused by smoking. The MoH has proposed increasing the SCT on tobacco to 105 per cent by 2015, to cut the number of smokers by 8 per cent from 2012 to 2020. The SCT would then rise to 145 per cent by 2018 and 155 per cent by 2020. “This would cut demand for tobacco,” said Mr. Luong Ngoc Khue, Director of the MoH’s Medical Examination and Treatment Department.

Analyst say one of the reasons why millions of Vietnamese people can afford to smoke is the comparatively low SCT rate, which is only higher than Cambodia’s. Brunei, meanwhile, has an 81 per cent tax rate, Singapore 71 per cent, and Thailand 70 per cent, according to a study by Health Bridge from Canada. Mr. Tran Quang Chieu, NA delegate for Nam Dinh province, however, believes that any increases would be ineffective and consumption would remain largely unchanged. “It would, though, affect the decisions of new smokers,” he said. Increased taxes were not the main reason for an increase in tobacco smuggling, he added, because prices of smuggled products were 30 to 60 per cent higher than domestic products.

NA delegate Tran Du Lich said that besides tax increases there should also be anti-smuggling measures adopted. He also proposed the tobacco prevention fund should spend 50 per cent of its fund on anti-smoking efforts. “The government should increase the SCT on tobacco products by 200 per cent, which would cut the number of smokers and protect people’s health,” he said.

Tobacco-related illnesses kill 40,000 people each year in Vietnam and the figure is expected to rise to 70,000 by 2030. Cigarette smoking causes five common diseases, including lung cancer, respiratory and upper gastro-intestinal cancer, chronic obstructive pulmonary disease, ischemic heart disease, and strokes. In mid-2013 Vietnam enacted the Law on Prevention and Control of Tobacco Harm, which bans smoking in public places such as schools, hospitals and offices.

Regarding the draft Law on Special Consumption Tax, some members of the National Assembly also agree with mooted increases to taxes imposed on alcohol, to limit consumption and protect health. Under the proposal, no stores, bars or restaurants will be allowed to sell alcohol between 10pm and 6am and are only permitted to sell one can of beer an hour to men and no more than three cans a day, and one can every two hours and no more than two cans a day to women. They are also prohibited from selling alcohol to people under 18 and pregnant women.

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