Cigarette smuggling situation is complicated
Data from the General Department of Market Management (Ministry of Industry and Trade) shows that in the first 10 months of 2024, there were 1,067 violations related to smuggled cigarettes, 800 cases were handled.
The total amount of administrative fines was over VND3.1 billion and the value of the violating goods was over VND5.6 billion. The number of cigarette packs and equivalents handled included 23,931 cigarette packs and 4,000 products of various types such as electronic cigarette devices and essential oils. Despite the efforts of state agencies, the cigarette smuggling situation remains complicated.
At the seminar “Increasing special consumption tax and combating cigarette smuggling - issues raised” held on November 19, many opinions from National Assembly deputies, experts, managers from State agencies and Associations raised the correlation between tax increase and cigarette smuggling, as well as noted the proposals on the increase level and roadmap for increasing special consumption tax (SCT) in accordance with the economic and social context to best support the goals set by the Government.
Lieutenant Colonel Le Thien Thanh - Deputy Head of the Investigation Guidance Department, Department of Drug and Crime Prevention, Border Guard Command (BDBP) - assessed:
"In 2024, smuggling and importing foreign cigarettes and tobacco materials of unknown origin into Vietnam will be a pressing issue in society. This affects the health of consumers, the competitiveness of legal tobacco manufacturing enterprises, and causes losses to the state budget."
In that context, Senior Lieutenant Colonel Le Thien Thanh said that it is necessary to have a roadmap and a reasonable tax increase policy that is suitable for reality, in which proactive implementation harmonizes the Government's goals of limiting consumption.
"The tax increase roadmap should be extended so that the Border Guard and market management agencies have more time to prepare plans and forces to effectively respond to the increase in cigarette smuggling due to tax increases," said Mr. Thanh.
Lieutenant Colonel Le Thien Thanh emphasized the need to promptly amend Decree 98/2020/ND-CP to issue strict sanctions against the transportation, trading and use of smuggled cigarettes. In particular, it is necessary to strengthen the legal basis in the fight against smuggling, as well as create a healthy business environment for legitimate businesses to exist.
Adding, Mr. Trang A Duong - Member of the National Assembly's Ethnic Council - commented: "To effectively support the fight against cigarette smuggling after the tax increase, the tax increase roadmap should be extended, the tax increase frequency should be every 2-3 years so that market management agencies have more time to plan and prepare forces to respond to the wave of smuggling that is predicted to flood into Vietnam after the tax increase."
Effective smuggling control strategy needed
At the seminar, Prof. Dr. Hoang Van Cuong - Member of the National Assembly's Finance and Budget Committee commented: "The main goal of special consumption tax is to regulate consumer behavior, not to increase budget revenue, although this also needs to be taken into account.
As for cigarettes, this is a product that is harmful to health, but tax policies must encourage changes in behavior towards healthier ones, instead of creating opportunities for the use of alternative products that do not guarantee quality or are smuggled.
Professor Hoang Van Cuong agrees that the adjustment should prioritize the use of absolute tax (fixed tax on each product), helping to stabilize revenue and avoid encouraging the consumption of cheap, low-quality cigarettes.
"It is necessary to harmonize public health goals, budget revenue and impact on consumer behavior, while having an effective smuggling control strategy," emphasized Prof. Dr. Hoang Van Cuong.
Regarding the issue of tax correlation and smuggled cigarettes, Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consulting Association (VTCA), analyzed that because special consumption tax is included in the selling price, increasing special consumption tax and restricting cigarettes is necessary.
However, when domestic prices are high, it is an opportunity for smuggled tobacco products to avoid all taxes and product content regulations to compensate for the likely domestic consumption shortfall due to the reduction in legal production.
