Vietnam’s National Assembly is considering amending the Law on Special Consumption Tax this year to create a robust increase in tobacco taxes, pointing to the World Health Organization (WHO)’s recommendation that the tax be 75% of the retail price. Currently, tobacco taxes in the country are 36% to 38.8% of the price.
A 2023 report by the Vietnam Health Economics Association estimated that the total cost of tobacco-related healthcare and economic losses reached 108 trillion VND ($4.14 billion) annually, equivalent to 1.14% of GDP and five times higher than the budget revenue generated by the tobacco industry. The report also said cigarettes are too accessible, with 40 domestic tobacco brands selling for less than 10,000 VND (38 cents) per pack.
The draft amendment being considered in the June session proposes two options: Introducing a fixed tax of 2,000 VND (8 cents) per pack in 2027 or introducing a fixed tax of 5,000 VND (19 cents) per pack in 2026. Both would increase annually until reaching 10,000 VND and 15,000 VND (57 cents) per pack, respectively, by 2031. According to officials, the second, higher-taxed option would generate an annual additional 29 trillion VND ($1.1 billion) in 2030, an increase of 169% compared to scenarios without tax increases, and make the tax rate 59.4% of the retail price.
