The Vietnamese government has proposed a higher excise tax on cigarettes in a draft revision of the Law on Excise Tax, set to be submitted to the National Assembly during its ongoing eighth sitting. The bill, expected to be passed in May next year, focuses on reducing the country's high smoking rates by making cigarettes less affordable.

Currently, the excise duty on tobacco in Vietnam is 75 percent of the factory price. The government has put forward two solutions that involve introducing an absolute tax per pack, in addition to maintaining the existing percentage-based tax. The first solution proposes adding VND2,000 ($0.07) per pack starting from 2026, increasing annually until it reaches VND10,000 ($0.4) by 2030. The second solution suggests an immediate addition of VND5,000 ($0.19) per pack in 2026, with annual increases of VND1,000 ($0.03) until it also reaches VND10,000 by 2030.

Health experts and organizations like the World Health Organization support the tax increase, emphasizing that higher prices are an effective way to reduce smoking rates. With over 15 million smokers consuming around 4 billion packs annually, Vietnam faces significant public health challenges linked to tobacco use. The proposed tax hike aims to discourage smoking, alleviate the health burden, and reduce the economic costs associated with tobacco-related diseases.

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