Brian Jeffrey
The Vietnamese government has put forward a proposal to the National Assembly suggesting changes to the Special Consumption Tax Law, aiming to increase taxes on alcohol, beer, and tobacco gradually from 2026 to 2030.
The proposal retains the current 75% tax rate on tobacco but plans to introduce a new specific tax gradually. The objective is to lower tobacco use among men aged 15 and above to under 36% by 2030, aligning with Vietnam’s Tobacco Harm Reduction Strategy. This change also aims to raise the tax as a percentage of retail prices to comply with WHO guidelines.
Two scenarios are suggested:
Scenario 1 involves a gradual implementation of specific taxes starting at 2,000 VND per pack in 2026, increasing annually to reach 10,000 VND per pack by 2030. Similar increases are proposed for cigars and other tobacco products.
Scenario 2 proposes higher initial tax rates beginning at 5,000 VND per pack in 2026, also aiming for 10,000 VND per pack by 2030, with greater increases for other tobacco products. The government prefers Scenario 2 as it is viewed as more effective in making tobacco less affordable and reducing consumption. The Finance and Budget Committee of the National Assembly endorses this approach for its consistency with worldwide tax reforms and its potential impact on consumer habits.
The draft legislation also suggests percentage-based tax rate increases for alcohol and beer, to be implemented annually from 2026 to 2030.
Proposed adjustments include:
For alcohol ≥20% ABV: Gradual increases from the current 65% tax rate to 80% in 2026 and up to 100% by 2030.
For alcohol <20% ABV: Tax rates will rise from 35% to 70% by 2030.
For beer: Increases will align with those for high-proof alcohol, reaching 80% in 2026 and 100% by 2030.
This strategy is anticipated to raise retail prices by at least 10% each year, in line with WHO recommendations aimed at reducing alcohol consumption and its associated harms.
While the Finance and Budget Committee generally supports the proposed tax increases, some members recommend differentiating beer tax rates from those for stronger alcohol, highlighting that the impact of these beverages is fundamentally linked to their alcohol content.
The goals of the proposed tax reforms include:
Reducing the consumption of harmful substances.
Lessening the public health issues related to smoking and alcohol misuse.
Boosting government revenues for social welfare initiatives.
Tran Thuong
