Modelling the expected impact of cigarette tax and price increases under Vietnam's excise tax law 2015-2020.

BACKGROUND

Vietnam's national tobacco control strategy aims to reduce the rate of smoking among male adults from 45% in 2015 to 39% by 2020. The aim of this paper is to assess what contribution cigarette tax increases under Vietnam's current excise tax plan can be expected to make to this target, and to discuss what additional measures might be implemented accordingly.

METHODS

This study uses a mix of administrative datasets and predictive modelling techniques to assess the expected impact of tax and price increases on cigarette consumption, tobacco tax revenues and the rate of smoking between 2015 and 2020.

FINDINGS

The average retail price of cigarettes is estimated to have increased by 16% (sensitivity analysis: 14%-18%) in inflation-adjusted terms between 2015 and 2020, while cigarette consumption is projected to decrease by 5.1% (4.5%-5.5%). The rate of smoking among males is projected to decrease to 42.8% (42.1%-43.6%) compared with the target of 39%. Total tax revenues from cigarettes are projected to increase by 21% (19%-23%), reflecting an extra ₫3300 billion in inflation-adjusted revenues for the government.

CONCLUSION

The current excise tax law is expected to have only a modest impact on the rate of smoking in Vietnam, though it has generated tax revenues. If Vietnam is to achieve its tobacco control targets, the government should implement a mixed excise system with a high-specific component to promote public health by raising the price of cigarettes more significantly.