Vietnam loses $300 mln in annual tax over smuggled cigarettesThe Vietnamese government has lost VND6.5 trillion (US$306 million) in tax collection on an annual basis over the last five years due to cigarette smuggling, the Vietnam Tobacco Association said Tuesday.
Smuggled tobacco accounts for 20 percent of the domestic cigarette market, with around 17 billion cigarettes illicitly brought into the country every year, the association said at a press conference in Hanoi.
The meeting was held to discuss draft amendments to the excise tax law, in which the excise tax for cigarettes has been proposed to increase from 65 percent to 75 percent starting on July 1, 2015. From January 1, 2018, the tax rate will be raised even further to 85 percent, according to the bill. However, VTA General Secretary Pham Kien Nghiep said he has called on the government not to increase the excise tax for cigarettes until the end of next year. The reason, according to a document the association has submitted to the Prime Minister, is that the country still fails to effectively curb tobacco smuggling. Expensive tobacco prices will only increase demand for smuggled products and create disadvantages for local cigarette makers, he said. Nghiep announced that smuggled cigarettes have posted an annual growth rate of 9 percent over the last five years, and cost the state budget a massive VND6.5 trillion loss in tax collection. Vietnam is one of 15 countries with the highest number of smokers in the world, and every year the country spends about VND22 trillion ($1.04 billion) on cigarettes, according to figures released by the Health Ministry’s Program for Prevention and Control of Tobacco Harm in December 2013. In 2012, Vietnam consumed more than 4 billion packs of cigarettes, according to a VTA report. Meanwhile, smoking-related diseases kill over 40,000 people in Vietnam each year and if no measure is taken, nearly 10 percent of the Vietnamese population will have died from smoking-related causes by 2030, the Ho Chi Minh City Health Education and CommunicationCenter has warned. Tuoitrenews | 