Tobacco taxation in Vietnam: A human capital development imperative (2024)

FAQs

What is the tobacco tax in Vietnam? ›

The tax, currently accounts for 75% of factory price, only accounts for 38.85% of retail price, it said. This is far below the 70% of retail price tax that the World Health Organization recommends. Vietnam's special consumption tax on cigarette is nearly lowest in ASEAN, only higher than Cambodia, Laos and Myanmar.

Federal Level: On the federal level, revenue from cigarette and tobacco taxes helps fund programs that support children and adults across the country, including the Children's Health Insurance Program (CHIP). CHIP provides health insurance to many children in the U.S.

HIGHER TOBACCO TAXES WILL NOT REDUCE TOBACCO USE. Since tobacco addiction is very strong, higher prices will not impact demand; therefore raising taxes is not justified. Even in high-income countries, many tobacco users are unaware or under- estimate the risks of tobacco.

Gains on disposal of capital/securities in a Vietnamese entity (including a Limited Liability Company or Joint Stock Company) are subject to Corporate Income Tax at the standard rate of 20% on the gain, and treated as “other income”.

In 1921, Iowa became the first state to tax cigarettes; in 1969, North Carolina was the last state to enact a cigarette excise tax. In addition to the excise tax on cigarettes, 43 states have general sales taxes that apply to cigarettes.

How much revenue do state and local governments raise from taxes on cigarettes and vaping? State and local governments collected $19 billion in revenue from tobacco taxes in 2020, which was 0.5 percent of state and local general revenue. State taxes accounted for 98 percent of tobacco tax revenue in 2020.

The economic activities generated from the production and consumption of tobacco provides economic stimulus. It also produces huge tax revenues for most governments, especially in high-income countries, as well as employment in the tobacco industry.

Answer and Explanation: The correct answer is option a. The number of tobacco users has decreased.

The rise of value of tobacco accelerated the economic growth in America. The cultivation of tobacco as a cash crop in America marks the shift from a subsistence economy to an agrarian economy. Tobacco's desirability and value led to it being used as a currency in colonies.

Four states (Georgia, Missouri, North Carolina, and North Dakota) have an excise tax on cigarettes that is less than $0.500 per pack. Nine states (Alabama, Idaho, Indiana, Mississippi, Nebraska, South Carolina, Tennessee, Virginia, and Wyoming) have an excise tax on cigarettes from $0.500 to $0.999 per pack.

Why is tobacco a negative externality? ›

Smoking has a major negative externality because it not only pollutes the world; it causes other people to have the long term effects as well. Smoking is the cause of a lot of diseases that can be easily prevented.

Cigarette taxes are regressive: that is, low- and middle-income taxpayers pay more of their income in these taxes, on average, than do upper-income families.

All taxes in Vietnam are imposed at the national level; there are no local, city, or provincial taxes. Enterprises should pay tax in localities where they are headquartered or have duly registered branches.

Tax residents are subject to PIT on their worldwide employment income, regardless of where the income is paid or earned, at progressive rates from five percent to a maximum of 35 percent. Non-resident taxpayers are subject to PIT at a flat rate of 20 percent on their Vietnam-sourced income.

Tax residents are subject to Vietnamese personal income tax (PIT) on their worldwide taxable income, wherever it is paid or received. Employment income is taxed on a progressive tax rates basis. Non-employment income is taxed at a variety of different rates.

Those tobacco seeds became the seeds of a huge economic empire. By 1630, over a million and a half pounds of tobacco were being exported from Jamestown every year. The tobacco economy rapidly began to shape the society and development of the colony. Growing tobacco takes its toil on the soil.

The American tobacco industry was started by John Rolfe, the eventual husband of Pocahontas. Rolfe brought tobacco seeds to Jamestown from the Caribbean island of Trinidad. In 1612, he harvested his first tobacco crop, which was well-received in England, and which, became the colony's cash crop!

Tobacco was taken in payment by the London merchants when farmers could not pay their debt. These new laws, coupled with others such as the Navigation Act and Quartering Act, increased tensions between the colonies and Great Britain and led to the outbreak of the rebellion which became the American War of Independence.

In 2021, revenues from tobacco tax in the United States amounted to 12.14 billion U.S. dollars. The forecast predicts a decrease in tobacco tax revenues down to 11.28 billion U.S. dollars in 2027. Total U.S. government revenue in 2020 was 3.42 trillion U.S. dollars.

Smoking Costs U.S. Economy Almost $900 Billion a Year.

How much does tobacco contribute to the economy in the US? ›

This report concludes that tobacco generated over 1.8 million jobs that produced $54.3 billion in wages and benefits, while total taxes generated from tobacco were almost $36 billion. Most of tobacco's economic impact comes from the supplier and expenditure-induced sectors rather than the core sector.

In 2019, the largest tobacco companies spent $8.2 billion marketing cigarettes and smokeless tobacco in the United States. This amount translates to about $22.5 million each day, or nearly $1 million every hour.

We also found that among poor households, tobacco use can exacerbate poverty by increasing health care costs, reducing incomes, and decreasing productivity, as well as by diverting limited family resources away from basic needs.

Tobacco use increases health care costs, reduces income, and decreases productivity. At the same time, spending on tobacco products diverts limited family resources from spending on basic needs like food and shelter, not to mention healthcare and education.

But states would also lose revenue from cigarette excise taxes, which amounted to $13.75 billion in 2006. If Americans stopped smoking altogether, states could see a 1.4 percent decrease in revenue, according to a chapter from Hunter College's Howard Chernick. A similar, spilt-effect would be true for Social Security.

The profit margin of a tobacco company refers to the percentage of profit the company generates from the sales of its tobacco products. Generally, this margin is very high due to the high demand for tobacco products and the addictive nature of the products.

Prices continue to rise because of tax increases specifically on tobacco products and it creates a real burden for the average adult smoker. In an attempt to increase revenue, many states are pushing for and passing legislation to raise cigarette taxes, but it's at the smoker's expense.

The intense labor required for tobacco crops led to the increase in importing African slaves & enslaving Native Americans. The decrease in the practice of indentured servitude after 1676 CE, and the intense labor required for tobacco crops, led to the increase in importing African slaves and enslaving Native Americans.

Tobacco formed the basis of the colony's economy: it was used to purchase the indentured servants and enslaved laborers to cultivate it, to pay local taxes and tithes, and to buy manufactured goods from England.

Phase One GROWING TOBACCO degrades soil, threatens biodiversity, and uses pesticides and fertilizers exposing farm workers to hazardous chemicals. 90% of tobacco farming is in low- to middle- income countries, with the top being China, Brazil, and India.

What country taxes cigarettes the most? ›

As a percentage of the retail price of a cigarette, Australia has one of the highest rates of national tobacco-specific tax in the world: 65% in 2020.

In the United States, cigarettes are taxed at both the federal and state levels, in addition to any state and local sales taxes and local cigarette-specific taxes. Cigarette taxation has appeared throughout American history and is still a contested issue today.

Smoking causes about 90% (or 9 out of 10) of all lung cancer deaths. More women die from lung cancer each year than from breast cancer. Smoking causes about 80% (or 8 out of 10) of all deaths from chronic obstructive pulmonary disease (COPD).

Taxes on "sin" items like alcohol and cigarettes can be construed as a Pigovian tax. This is because they discourage behavior that not can harm an individual user, but also has knock-on effects for others.

Examples of progressive tax include investment income taxes, tax on interest earned, rental earnings, estate tax, and tax credits. The opposite of the progressive system is the regressive tax rate where tax liability reduces as the taxable amount increases.

progressive tax—A tax that takes a larger percentage of income from high-income groups than from low-income groups. proportional tax—A tax that takes the same percentage of income from all income groups. regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Tax residents are subject to PIT on their worldwide employment income, regardless of where the income is paid or earned, at progressive rates from five percent (5%) to a maximum of thirty five percent (35%).

What is capital tax in Vietnam? ›

Gains on disposal of capital/securities in a Vietnamese entity (including a Limited Liability Company or Joint Stock Company) are subject to Corporate Income Tax at the standard rate of 20% on the gain, and treated as “other income”.

The economy of Vietnam is a mixed socialist-oriented market economy, which is the 36th-largest in the world as measured by nominal gross domestic product (GDP) and 26th-largest in the world as measured by purchasing power parity (PPP) in 2022.

The tax, currently accounts for 75% of factory price, only accounts for 38.85% of retail price, it said. This is far below the 70% of retail price tax that the World Health Organization recommends. Vietnam's special consumption tax on cigarette is nearly lowest in ASEAN, only higher than Cambodia, Laos and Myanmar.

On 7 July 2015, officials from the U.S. and Vietnam signed an income tax treaty.

As regulations above, personal exemption is 11 million VND/month (132 million VND/year) and dependent exemption is 4,4 million VND/dependent/month. Rate of personal exemption is promulgated in Resolution 954/2020/UBTVQH14 issued on 02/6/2020 as follows: - Personal exemption: 11 million VND/month (132 million VND/year);

Vietnam Free Trade Zones are also called 'Economic Zones' or 'Industrial Zones'. There are 18 coastal economic free trade zones set up by the government along with over 325 state-supported industrial parks spread across the country.

The general statute of limitations for imposing tax is ten years and for penalties is five years.

Because of this low tax burden, cigarettes in Vietnam are among the cheapest in the world, with the price of a 20-cigarette pack of the most popular brand at less than US$1 and for economy brands as low as US$0.15-0.20 cents per pack.

The average price of a cigarette pack in Vietnam is a third of the world's and among the world's lowest, a factor in the nation's high smoking rate, experts say.

Resident taxpayers are subject to PIT on their worldwide employment income, irrespective of where the income is paid or earned, at progressive rates from five percent to a maximum of 35 percent.

Why is smoking so popular in Vietnam? ›

The Vietnamese Smoking Perception

Source Smoking is a part of the Vietnamese culture. Exchanging cigarettes is a common form of greeting. Numerous Vietnamese historical figures were known to be smokers. Smoking is perceived as a sign of being cultured, especially among the youth.

400 cigarettes or 100 cigars or 50g of tobacco. 1,5L of spirits or 2L of alcohol containing up to 22% volume of alcohol or 3L of beer (or similar light alcoholic beverages) 3Kg of coffee.

The price of 1 package of Marlboro cigarettes in Ho Chi Minh City is 30,081 ₫

The sale of tobacco products is prohibited to persons under the age of 18.

One of the biggest reasons for the differences in cigarette prices across states is state cigarette taxes. The taxes, in addition to generating revenue for the state government, act as deterrents to smoking in an attempt to improve public health.

Overall, we find a negative and statistically significant relationship between income and price elasticity in Vietnam. For each additional income of VND 1.0 million (equivalent to US$46.5), the elasticity tends to fall by 0.026 units, implying that smokers with lower incomes are more price responsive (column 1).

Vietnam personal income tax rates are progressive to 35%. Nonresidents are taxed at a flat tax rate of 20%. Nonemployment income is taxed at rates from 0.1% to 25%. All residents and non-residents are subject to Personal Income Tax in Vietnam.

At the other end of the spectrum, Iraq is the only country with a score of zero in 2018, reflecting its lack of a cigarette excise tax and minimal other taxes, resulting in very inexpensive cigarettes and affordability that has not significantly changed over time.

The countries with the fewest smokers are Sweden (9.3 per cent), Iceland (11.2 per cent), Finland (12.5 per cent), Norway (12.9 per cent) and Luxembourg (13.5 per cent). Sweden, the European country with the lowest rates of smoking, has battled with cigarettes for years.