Tobacco company hits out at proposed tax hike
A top official of the Vietnamese tobacco industry has proposed an urgent
crackdown on smuggling instead of raising a special consumption tax on
tobacco products in order to save money for the State budget.
A top official of the Vietnamese tobacco industry has proposed an urgent
crackdown on smuggling instead of raising a special consumption tax on
tobacco products in order to save money for the State budget.
He made the suggestion after the Ministry of Finance unveiled a plan to raise the consumption tax on cigarettes to 75 percent by July 2015 and 85 percent by 2018, as part of draft amendments to the Law on Special Consumption Tax.
In a recent interview with the Vietnam News Agency, Chairman of both the Vietnam Tobacco Association and the State-owned Vietnam National Tobacco Corporation Vu Van Cuong said the hike will pave the way for smuggling, reducing the domestic tobacco industry’s market share, translating into poorer takings to the State budget.
As smugglers can evade tax, they can offer lower prices than those of locally-made products. The domestic smokers thus easily turn to the contraband, irrespective of its harm on their heath, he said.
He cited the tax hike from 45 percent to 55 percent in January 2006 and the current 65 percent in 2008 as the reason for a 50 percent growth of contraband tobacco from 2006-2012, or some 6 billion cigarettes
The 2012 survey by the International Tax and Investment Centre and Oxford Economics showed that Vietnam is the second largest consumer of smuggled cigarettes among 11 surveyed Asian nations.
In 2013 alone, illicit cigarettes took away 20 percent of domestic market share. The State loses an estimated 6.5 trillion VND (309 million USD) in tax each year. As these products are not subject to any regulation on displaying health warnings and their tobacco content, their quality is not ensured.
Cuong suggested the Prime Minister direct a nationwide anti-smuggling campaign, previously successful in the 1990s, especially near south-western border gates where contraband tobacco products often make their way to vendors and pharmacies.
He said once smuggling is stopped, the tobacco tax can be raised along a suitable roadmap, adding that the sector contributed nearly 20 trillion VND (nearly 1 billion USD) to the State budget.-VNA
He made the suggestion after the Ministry of Finance unveiled a plan to raise the consumption tax on cigarettes to 75 percent by July 2015 and 85 percent by 2018, as part of draft amendments to the Law on Special Consumption Tax.
In a recent interview with the Vietnam News Agency, Chairman of both the Vietnam Tobacco Association and the State-owned Vietnam National Tobacco Corporation Vu Van Cuong said the hike will pave the way for smuggling, reducing the domestic tobacco industry’s market share, translating into poorer takings to the State budget.
As smugglers can evade tax, they can offer lower prices than those of locally-made products. The domestic smokers thus easily turn to the contraband, irrespective of its harm on their heath, he said.
He cited the tax hike from 45 percent to 55 percent in January 2006 and the current 65 percent in 2008 as the reason for a 50 percent growth of contraband tobacco from 2006-2012, or some 6 billion cigarettes
The 2012 survey by the International Tax and Investment Centre and Oxford Economics showed that Vietnam is the second largest consumer of smuggled cigarettes among 11 surveyed Asian nations.
In 2013 alone, illicit cigarettes took away 20 percent of domestic market share. The State loses an estimated 6.5 trillion VND (309 million USD) in tax each year. As these products are not subject to any regulation on displaying health warnings and their tobacco content, their quality is not ensured.
Cuong suggested the Prime Minister direct a nationwide anti-smuggling campaign, previously successful in the 1990s, especially near south-western border gates where contraband tobacco products often make their way to vendors and pharmacies.
He said once smuggling is stopped, the tobacco tax can be raised along a suitable roadmap, adding that the sector contributed nearly 20 trillion VND (nearly 1 billion USD) to the State budget.-VNA
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