WHO welcomes the government plan to increase excise tax on tobacco products and introduce new excise tax on sugar-sweetened beverages.
Recently, the Ministry of Finance proposed two tobacco tax options for public comment. Option 1 is to implement a mixed system by applying a fixed amount of tobacco tax (VND 1000 per pack) in addition to the 75% ad valorem rate in 2020. Option 2 is to maintain the ad valorem excise system, but raise to 80% in 2020 and 85% in 2021. The Ministry also proposed a tax of 10% on all kind of sugar-sweetened beverages (SSBs).
Tax on tobacco products tackles high smoking rate in Viet Nam
Tobacco use has a large negative impact on public health and the economy of Viet Nam. Smoking causes more than 40 000 deaths each year in Viet Nam. The economic loss from death and disease caused by smoking amounts to nearly 1% of Viet Nam’s gross domestic product.
Viet Nam’s tobacco tax and price levels are low compared to the global average. The tax share in the retail price of the most popular tobacco brand in Viet Nam currently stands at 35.7%, while the global average is 56.1%.
While Dr Kidong Park, WHO Representative in Viet Nam, strongly endorsed the implementation of option 1, he strongly recommended considering the implementation of a higher fixed amount of tobacco tax than those of option 1. "It is expected that the adult male smoking rate would decrease by 3% if Viet Nam applied a tobacco tax of VND 2000 per pack".
The tax hike would contribute to the target of the National Tobacco Control Strategy to reduce adult males smoking rate from 45.3% in 2015 to 39% in 2020.
Excise tax on sugar-sweetened beverages helps to reduce child obesity
Overweight and obese children are at higher risk of developing serious health problems including type 2 diabetes, high blood pressure, asthma and other respiratory problems, sleep disorders and liver disease. Childhood obesity also increases the risk of adult obesity, non-communicable diseases (NCDs), premature death and disability at adults.
In order to halt the rise of obesity and diabetes, and to reduce premature deaths from NCDs, WHO recommend reducing the intake of free sugars to less than 10% total energy intake in adults and children. Tax on SSBs is a cost-effective policy option to reduce consumption of free sugars among the population.
While Dr Park endorsed the SSB tax proposal, he highly recommended that every effort should be made to achieve the 20% change in price, ideally at the start or progressively in order to have meaningful effect at the consumption and health-outcome level. He also emphasized "the Government should implement proactively comprehensive measures to curb the threat of obesity and NCDs. Tax policy is just one of a range of cost-effective measures".