Almost exactly 75 years ago, on 17 May 1950, Viet Nam became a member of the World Health Organization (WHO), marking the start of a long partnership to improve the health of the people of Viet Nam.
In a few short weeks, National Assembly members will have a critical opportunity to consider the draft Revised Excise Tax Law. This decision has the potential to save lives and protect health for decades to come. For Viet Nam to achieve a sustainable, higher level of economic growth, then investing in human capital to build a healthier and longer-living population is crucial.
Over the past few decades, Viet Nam has emerged as one of the fastest growing economies in the Asia-Pacific region. Yet, Viet Nam is not immune to the global expansion of non-communicable diseases (NCDs) largely due to behavioral or lifestyle risk factors like tobacco and alcohol use.
In response to today’s health challenges, General Secretary To Lam in his speech to health workers on Vietnamese Doctors’ on 27 February, recommends first focusing on preventing disease, improving health and prolonging life.
WHO views the upcoming discussion on tobacco taxation as a historic opportunity to align with these recommendations. Increasing tobacco taxes is a scientifically proven strategy to prevent disease, improve health, and extend lives—particularly among marginalized communities and the broader population—while also safeguarding the economy.
The long-term economic and public health benefits from tobacco tax policy reform must be prioritized over short-term concerns, particularly those propagated by industry lobby groups. Otherwise, the burden of NCDs will increasingly hinder Viet Nam's long-term growth prospects.
Smoking threatens Viet Nam’s social and economic development
Let us review the evidence.
Tobacco is very harmful to health, killing up to half of its users who do not quit. Around the world, it causes more than 8 million deaths each year.
In Viet Nam, smoking-related diseases claim over 100,000 lives each year. Smoking harms not only those who smoke but also those exposed to second-hand smoke, including women and children.
With more than 15 million current smokers, tobacco use is fueling a growing crisis of illness and premature deaths. Smoking among men has reduced slightly from 47.4% in 2010 to 41.1% in 2021. However, based on current trends, Viet Nam will not achieve its National Tobacco Control Strategy target of reducing smoking among men to below 36% by 2030. Alarmingly, there are signs that tobacco consumption has risen again, with the General Statistics Office reporting that total cigarette production increased by 17% from 2021 to 2023. This threatens Viet Nam’s progress towards its health-related Sustainable Development Goals (SDGs) .
Beyond its devastating health impact, tobacco use deepens poverty and poses a long-term obstacle to economic development and health equity. High rates of smoking weaken the workforce, resulting in losses in economic participation and productivity, and compounding inequities between the poorest and most marginalized groups and the rest of the population.
The economic costs of smoking are estimated at 108,000 billion VND each year, or about 1.1% of gross domestic product (GDP), through lost productivity and health care expenditure. This is a threat to Viet Nam’s aspiration of achieving high-income country status by 2045.
Raise tax to raise prices and curb smoking
One of the biggest challenges to curb smoking is that tobacco in Viet Nam is incredibly cheap – among the lowest in the region and lower than in many neighboring countries. Smoking has become even more affordable over time as people’s incomes have increased, but tobacco prices have not.
WHO recommends that taxes make up at least 75% of the retail price. Yet Viet Nam has very low tobacco tax, with taxes comprising around just 36% of the total retail price of a pack of cigarettes in 2022. This is among the lowest in the region.
Increasing tobacco tax, and therefore the price, is the fastest and most cost-effective way to reduce tobacco consumption. It encourages smokers to quit and discourages young people from starting. Tobacco taxation can protect both current and future generations of workers in Viet Nam.
WHO congratulates the Ministry of Finance and the Government on the draft Revised Excise Tax Law, which is a step in the right direction. It is clear that the Government has acknowledged the urgent need to address tobacco use. However, the current proposal needs to go further to achieve Viet Nam’s national smoking reduction targets and maximize the positive impact on health and the economy.
Based on our modelling, WHO very strongly recommends a specific tax of 15,000 VND per pack by 2030, on top of the current percentage rate of 75% of the factory price. Implementing these changes without delay would help reduce men’s smoking to below 36% by 2030, in line with the national target. This change would mean 3.2 million fewer people smoking by 2030 compared to the current excise system.
Importantly, a change at this rate would massively increase annual tax revenues, bringing in an extra 29.3 trillion dong in 2030 compared to 2020. These revenues can be invested in the delivery of public goods and services – like health, education and infrastructure - that will ultimately promote and sustain economic growth. Similarly, by lowering the heavy burden of tobacco use on Viet Nam’s health system, resources would be freed-up to further promote high-quality care and a healthier population.
Leaving a smoke-free legacy
In summary, it is WHO’s strong view that Viet Nam’s current tobacco tax system is not optimally aligned with the country’s deepest values, nor operating in the interests of public health or the economy. The path to higher economic growth in Viet Nam relies on promoting human capital through a healthier and more educated workforce. Tobacco use only harms human capital and the prospects for sustainable development.
We strongly urge lawmakers to reform tobacco tax when they are given this historic opportunity in a few weeks’ time. Investing in tobacco control now will have a lasting impact on sustainable growth by protecting today’s youth and tomorrow’s workforce. The tax reform would achieve a ‘win-win’ of reducing tobacco consumption and therefore the health impacts of tobacco use, as well as generating additional revenue for investment in key government priorities.
As General Secretary To said, “Protecting, caring for, and improving people's health is not only the task of the health sector but also the responsibility of each citizen, the entire political system and the whole society.”
WHO hopes that National Assembly members use the upcoming session to join hands with the people of Viet Nam to help create a healthier, more prosperous future for the next 75 years and beyond.