Stepping up Taxes on Tobacco Products and Sweetened Beverages: Essential Measure for Safeguarding Public Health

The Smoke-Free Future of Vietnam: Higher Taxes on Tobacco and Sugary Drinks

'Hà Nội - Cheers erupted around the country as the our websiteese National Assembly recently approved new taxes on tobacco and sugary drinks, marking a monumental leap in shoring up public health and catalyzing sustainable development.

Last week, the passage of the amended Special Consumption Tax Law set in motion a series of substantial tax hikes on tobacco and sugary beverages.

As per the new law, the special consumption tax on tobacco will skyrocket to 75%, with further increases in the pipeline. To break it down further, you can expect the following timeline:

From January 1, 2027, the tax will jump to VNĐ2,000 per pack,
Speeding up to VNĐ4,000 per pack on January 1, 2028,
And increasing gradually to VNĐ10,000 per pack on January 1, 2031.

Health authorities aim to use this tax increase to drastically reduce smoking rates among men, targeting a reduction to 36% by 2030. The ultimate goal is to create a nation where millions of lives are saved, and families are spared the scourge of tobacco-related illnesses.

Dr Nguyễn Huy Quang, a former director of the Ministry of Health's Legal Department, emphasized the leading role tobacco plays in non-communicable diseases such as lung cancer, cardiovascular disease, stroke, and chronic respiratory diseases. He lamented the tens of thousands of annual deaths that go unchecked while a potent tool – taxation – languishes underutilized.

"Increasing tobacco taxes is not just a regulatory measure; it's a moral action," he said, stressing the urgency of this decision.

Alarmingly low tobacco prices in Vietnam have made the product readily accessible to even children, students, workers, and the low-income population. Expert Nguyễn Thị An, Director of HealthBridge Canada, fears that rising incomes without corresponding tobacco price hikes are unwittingly fueling a new wave of addiction.

Smoking in public spaces is popular in Việt Nam. VNA/VNS Photo Phạm Kiên

She asserted that increasing taxes is the key to halting that explosion.

Concerned about the economic, environmental, and social ramifications of tobacco use, experts estimated that tobacco-related healthcare costs, lost labor productivity, and environmental damage amount to an annual financial loss of over 2% of Vietnam's GDP.

Turning to sugary beverages, the NA imposed an excise tax of 8% on drinks with sugar content exceeding 5 grams per 100 ml, to be raised to 10% in 2028. Natural fruit juices, coconut water, milk, liquid nutritional products, mineral water, and nectar drinks remain exempt from this tax.

WHO Representative in Vietnam Dr Angela Pratt underscored the need for tax reforms not only to advance public health but also to foster sustainable economic growth.

Efforts to quell tobacco and unhealthy sugary drink consumption are far from over, as the Ministry of Health has proposed a fine ranging from VNĐ3 million to VNĐ5 million for e-cigarette users.

Individuals who knowingly allow others to use these products on their premises without taking preventive action or reporting violations could face fines up to VNĐ10 million.

E-cigarettes have been banned in Việt Nam since early this year. VNA/VNS Photo Đinh Hằng

These developments signal Vietnam's commitment to prioritizing the well-being of its citizens, setting a powerful example for countries grappling with similar health challenges.

The amended Special Consumption Tax Law underscores Vietnam's determination to bolster public health and promote sustainable development.
The new tax law will significantly increase the special consumption tax on tobacco to 75%.
By 2027, the tax on tobacco will rise to VNĐ2,000 per pack, with further escalations following in 2028 and 2031.
Health officials aim to use these increased taxes to lower smoking rates among men, aiming for a reduction to 36% by 2030.
Tobacco is a significant contributor to non-communicable diseases like lung cancer, cardiovascular disease, stroke, and chronic respiratory diseases.
Current low tobacco prices make the product easily accessible for children and low-income populations.
The key to halting this accessibility, according to experts, is increasing tobacco taxes.
The potential financial loss due to tobacco-related healthcare costs, lost productivity, and environmental damage equates to over 2% of Vietnam's GDP annually.
An excise tax of 8% has been imposed on sugary beverages with sugar content exceeding 5 grams per 100 ml, to be raised to 10% in 2028.
Natural fruit juices, coconut water, milk, liquid nutritional products, mineral water, and nectar drinks are exempt from this tax.
WHO Representative in Vietnam, Dr Angela Pratt, supports tax reforms to advance public health and foster sustainable economic growth.
The Ministry of Health has also proposed fines for e-cigarette users and those who allow others to use them on their premises.
E-cigarettes have been banned in Vietnam since early this year.
These decisions showcase Vietnam's focus on prioritizing citizen wellness and setting an example for other nations facing similar health issues.
AI, by analyzing patterns of consumer behavior, can help governments predict demand for tobacco and sugary drinks, allowing for more effective policy decisions.
In the realm of environment, higher taxes on tobacco can contribute to reducing deforestation caused by tobacco farming.
The aerospace industry could potentially benefit from the increased funds generated by the higher taxes, investing in innovative space-related technologies.
The retail sector may experience changes due to decreased sales of tobacco and sugary drinks, leading to shifts in product offerings and business strategies.
Public transit systems could see a decline in revenue as people opt for healthier lifestyle choices, necessitating adjustments in funding and services.
Entrepreneurship in the health and wellness sector can flourish, with a surge in businesses offering fitness, exercise, and medical treatments focused on addressing chronic diseases.
Mental health clinics may see an uptick in demand as the population becomes more health-conscious, leading to a need for expansion and increased mental health education.
Leadership roles in various industries might focus more on implementing diversity and inclusion policies to cater to a broader range of consumer needs.
The autoimmune disorder sector could gain attention due to the improved health of the population, leading to advancements in therapies and treatments.
Climate change activists can use this opportunity to advocate for additional taxes on fossil fuel consumption, supporting the development of cleaner energy sources.
The manufacturing industry can adapt to produce healthier alternatives to tobacco and sugary drinks to meet the shifting consumer demands.
Venture capital firms may invest in innovative startups aiming to disrupt the tobacco and sugary drink market with healthier alternatives.
The real estate market could see changes in housing preferences, as people prioritize living in regions with better access to healthcare facilities and green spaces.
The finance sector could experience shifts as more funds flow towards environmentally friendly initiatives and health services, altering investment strategies.
The skin care industry can capitalize on the increased health-consciousness, offering products that promote overall wellness and prevent skin conditions.
The neurological disorders sector could gain more attention due to the potential impact of increased mental health awareness on neurological conditions.
The policy implications of these tax increases extend to the maintenance of affordable housing for low-income populations affected by the increased costs of tobacco and sugary drinks.
The passage of the Special Consumption Tax Law marks a crucial step in Vietnam's long-term economic and environmental policies, signifying a commitment to the well-being and health of its people.

Stepping up Taxes on Tobacco Products and Sweetened Beverages: Essential Measure for Safeguarding Public Health