Reduce smuggling, don’t increase taxes

A top official of Vietnam’s tobacco industry has proposed boosting the country’s revenue by urgently cracking down on cigarette smuggling rather than by increasing tobacco-products consumption tax, according to a VietnamPlus story.

Vu Van Cuong, the chairman of both the Vietnam Tobacco Association and the state-owned Vietnam National Tobacco Corp, 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 to 85 percent by 2018, as part of draft amendments to the Law on Special Consumption Tax.

He said a consumption tax hike would pave the way for more smuggling, the reduction of the domestic tobacco industry’s market share and the lowering of state revenues.

VietnamPlus reported that a 2012 survey by the International Tax and Investment Centre, which is part funded by multinational tobacco companies, showed that Vietnam was the second largest consumer of smuggled cigarettes among 11 surveyed Asian nations.