Protecting consumers’ health through reform of law on excise tax

Viet Nam is one of the countries with the highest rates of tobacco consumption worldwide. Also, the use of e-cigarettes among students has increased from 2.6% in 2019 to 3.5% in 2022. Moreover, the obesity rate is a concerning issue. From 2010 to 2020, the rate of overweight and obesity in school-age children has doubled. In this context, the Law on Excise Tax is considered an instrument to limit the consumption of harmful products and to reduce waste, contributing to the protection and improvement of consumers’ health. The Law on Excise Tax was adopted in 1990, revised many times and has had positive impacts on various aspects of the economic and social life. However, some limitations have arisen in practice, such as tax calculation methods (absolute, relative or mixed tax rates), narrow taxbase, and low tax rates for certain harmful products, demoting the ability of limiting consumption of harmful products. Therefore, the reform of the Law on Excise Tax is necessary to enhance its impact and contribute to increasing state budget.

Under the project "Strengthening Public Financial Management in Viet Nam", co-funded by the European Union and the German Federal Ministry for Economic Cooperation and Development (BMZ), the Ministry of Finance of Viet Nam and GIZ have recently organized a consultation workshop in Ha Long city to gather opinions from directly relevant entities - associations, manufacturing and business enterprises, and central and local authorities. The workshop focused on additional tax applied on products that are detrimental to health, especially through reforming the tax calculation methods, broadening the taxbase and increasing the tax rates for certain harmful products. At the same time, businesses shall have sufficient time to adjust and adapt to the reform of the Law on Excise Tax.

Based on the inputs, the draft Law will be finalized for submission to the Government for approval and to the National Assembly for consideration, with a proposal for admission in the legislative program at the 6th session of the 15th National Assembly (October 2023) and the hearing and adopting of the revised Law on Excise Tax at the 7th session of the 15th National Assembly (May 2024).

Mr. Nguyen Thanh Hung, Deputy Director General of the Tax Policy Department at the Ministry of Finance, stated: "A new policy is always expected to bring certain positive impacts, especially when considering the overall impact of the policy and the directions of the Party and State. We are currently in the stage of proposing revised excise tax policy directions for public recommendations. We do hope in the coming time, the developing of revised Law will receive contributions from the public and related organizations before adoption to ensure a high level of consensus and effective implementation."