The price of a cigarette pack in Vietnam is a third of the world’s average and among the world’s lowest, making it accessible to the large public.
Dao The Son, an economics expert and instructor at Vietnam Commercial University in Hanoi, on Wednesday said the price of cigarettes in Vietnam is roughly the same as in Cambodia and Laos, and is much lower than in Singapore, Malaysia and other countries in the region.
“Cheap cigarette prices make the product more accessible and affordable for young and poor people in Vietnam,” he said, adding that one of the main factors that explain Vietnam’s high smoking rate is low taxes on tobacco.
A 2021 report on tobacco taxes by the Southeast Asia Tobacco Control Alliance (SEATCA) said tobacco prices in Vietnam were getting cheaper and cheaper when compared to per capita income. The tobacco price index calculated in percentage compared to Vietnam’s per capita income dropped from 11.4% in 2000 to 3.04% in 2019, the report said.
The percentage between tobacco taxes and their retail prices in Vietnam is only 38.8%, much lower than in countries with average incomes (59%) and is around half when compared to most Southeast Asian countries, including Thailand, Singapore and Indonesia. The World Health Organization and the World Bank have recommended for the percentage between tobacco taxes and their retail prices to reach 75% in order to really impact purchases. Both organizations also considered tobacco prices and taxes to be the most important factors when it comes to tobacco use control.
On average, a 10% increase in tobacco prices would result in a 4% reduction of tobacco use in countries with high incomes, and a 5% reduction in countries with average or low incomes, according to the WHO.
Son said countries have been switching from proportional taxes to flat taxes and hybrid taxes to reduce smoking rates. A flat tax would apply the same amount of tax in every tobacco pack regardless of brands, preventing smokers from switching to cheaper brands. A flat tax would also reduce the number of cheap tobacco products, which would lower their accessibility to young people, Son added.
Flat taxes would often lead to higher prices, and they are also easier to manage. They are also less susceptible to price manipulation, he added.
A WHO report said the number of countries still applying proportional taxes for tobacco products has reduced from 57 in 2008 to 42 in 2018, while the number of countries applying hybrid taxes has increased from 48 in 2008 to 63 in 2018.
Most countries in Southeast Asia is also applying either flat or hybrid taxes for tobacco products. Brunei, Indonesia, Malaysia, the Philippines, Singapore and Myanmar all use flat taxes; Laos and Thailand use hybrid taxes, while Vietnam and Cambodia use proportional taxes.
Angela Pratt, the WHO representative in Vietnam, said tobacco is incredibly cheap in Vietnam, meaning the price would not be an obstacle for young people. She said this needs to change to make young people finding it more difficult to smoke, and a tax raise would be the quickest and most efficient solution to achieve that.
Ho Hong Hai, deputy head of the legislation department under the Ministry of Information and Communications, said Vietnamese people spend around VND49 trillion (US$1.97 billion) a year on tobacco, and while Vietnam is not yet a developed countries, its smoking rate is among the top 15 in the world.
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