Vietnam asked to delay raising taxes

The Vietnam Tobacco Association (VTA) has asked the government to delay raising the excise tax on tobacco until smuggling has been “considerably” reduced, according to the news website VnEconomy.

The association made its recommendation after both the Ministry of Finance and the Ministry of Health proposed increasing the tobacco tax to 105 percent of the per-pack retail price from the current 65 percent, saying that the move was needed to curb smoking in Vietnam.

Vu Van Tien, deputy director general of the Vietnam National Tobacco Corp., was quoted as saying that local businesses faced huge problems caused by rampant smuggling.

Increasing the excise tax would only exacerbate smuggling given that Vietnamese people were all tightening their belts, he said.

Vu suggested also that the government consider ending its practice of exporting confiscated tobacco, claiming the measure had yet to prove effective.

The practice began as a pilot project in August 2012 after local governments complained that they lacked the funds to seize and destroy smuggled tobacco. So to offset those costs, the government allowed these localities to export high-quality tobacco that they’d seized from smugglers.

During its recent announcement, the trade association offered to support various agencies in fighting tobacco smuggling by providing a bounty of VND3,500 for every pack of smuggled or counterfeit cigarettes seized by the local authorities.