return icon

Luxury-tax hike should be postponed until after 2024

Discussing the luxury tax law, experts said it is necessary to design a reasonable taxation roadmap and begin raising the tax only after 2024.
Le Dang Doanh, former Head of the Central Institute of Economic Management 

Under the tax system reform strategy by 2030, approved by the Government in April 2022, state management agencies would build up a roadmap for raising luxury tax, or special consumption tax, as called in Vietnam, for tobacco, beer and alcohol.

Le Dang Doanh, former Head of the Central Institute of Economic Management (CIEM), said that raising luxury tax on tobacco is one of the effective measures to reduce the impact of tobacco on people’s health. However, when designing policies, it’s necessary to give convincing figures, use tools to measure and prove the efficiency of policies.

It’s necessary to clarify how large the increase in state budget collections from legal businesses would be; how much money the budget would lose because of smuggling; and how many people would stop smoking. 

It’s also necessary to anticipate the business performance of companies that bear the new tax, and possible effects on material growing areas and material suppliers. This information is very important to calculate tax rates, and design a roadmap for tax increases to benefit involved parties.

He stressed that at this time, when the market has not fully recovered after the pandemic, and the Government wants businesses to stabilize production to serve economic growth, any policy which leads to business cost increases would be a barrier to the efforts of bringing businesses back to growth.

Nguyen Van Viet, chair of the Vietnam Beer, Alcohol and Beverage Association, said the increase in luxury tax needs thorough consideration, because taxation impacts large industries which make big contributions to state budget revenue and create millions of jobs.

Viet agreed that it is necessary to have a comprehensive assessment about the possible impact of the tax increase, and find out if the purpose of protecting people’s health can be achieved, or if people would shift to use smuggled goods.

Under the tax system reform strategy to 2030, state management agencies would build a roadmap on raising luxury tax on tobacco, beer and alcohol. This is in line with the Government’s policy shown in government’s Decision 2114 dated December 16, 2021 and the National Assembly’s law building program. 

The luxury tax project is a part of the law building program in 2023-2025. This is a reasonable time to help ensure the stabilization of the business environment for large manufacturing industries and create favorable conditions for enterprises to recover after the pandemic.

Hanoi Association for Brand Protection and Anti-Counterfeiting’s Deputy Chair Trieu Quang Thin warned of the smuggling increase once the luxury tax is raised.

Raising luxury tax on tobacco is the solution the countries consider once they need to increase state budget revenue. However, once the tax is raised, the price gap between legally sourced and smuggled tobacco would be wider, which would lead to an increase in smuggling.

Therefore, Thin said, if the Government decides to increase the luxury tax, it needs to figure out master solutions, especially an action program to fight against tobacco smuggling. 

If the tax increase is not associated with anti-smuggling measures, this would cause serious consequences, including the increase in smuggling. Meanwhile, if domestic enterprises scale down production, farmers would have to narrow their growing areas. Therefore, it is necessary to think about seeking new jobs and organizing the production of new crops for laborers.

Ngo Tri Long, a respected economist, said while the national economy is recovering, the enterprises in the industries which make big contributions to the state budget are still struggling to survive a series of difficulties. A reasonable tax policy would help businesses regain their growth. Therefore, it is necessary to thoroughly consider possible impact on socio-economic development with attention to disadvantaged groups.

It is also necessary to choose the right time for the tax increase, because enterprises need to have time to recover after the pandemic. If raising tax at this moment, this would have direct impact on the industries, lead to output decrease, which would have direct impact on workers’ incomes. This would also cause disruption of the supply chain which has not recovered fully after the pandemic.

Agreeing with Long, Lawyer Ha Thi Thanh said policymakers need to consider possible undesirable effects of the tax increase, including smuggling and a decrease in business performance of legal enterprises, which would lead to lower tax payments to the state budget.

Toan Thang



Exhibition spotlights Hue’s enameled bronze art


Government seeks to resolve businesses’ capital shortage

Online exposure confers stardom on young singers

Restrictions on traditional entertainment channels by the Covid-19 pandemic have turned out to be a blessing in disguise for some young singers presenting their talents online.

Hanoi's transport department proposes more vehicles using the exclusive BRT lane

Hanoi Department of Transport has proposed the municipal People's Committee to allow passenger cars with 24 seats or more, official vehicles, ambulances and fire trucks to use Bus Rapid Transit (BRT) lanes in the capital.

16 Vietnamese designers to open Thailand Fashion Week 2022

A fashion collection by 16 young Vietnamese designers is set to open Thailand Fashion Week 2022 for the first time, with the outfits on show featuring images of Vietnamese cultural heritages.

The man who helps Vietnamese find their biological parents

Do Hung Phuc’s joy is to help those who lost their parents at birth to find their roots. In three years, the young man has created many magical and emotional reunions.

US increases coffee imports from Vietnamese market

The market share of Vietnamese coffee as part of the United States’ total imports increased from 8.95% to 9.6% during the opening four months of the year, according to statistics compiled by the General Department of Vietnam Customs.

Teenager specializes in diaphonization of animals

Two years ago, after he saw images of diaphonized specimens on the internet, Nguyen Tien Minh Duy, 15, from Buon Ma Thuot City began searching for information and learning about diaphonization.

Universities use ‘conflicts’ to help students learn more about business

Future schools need to be good at designing experiences for students to help them in their career and purpose, Lee Newman from Spain’s IE University said in an interview with VietNamNet.

Famous painter Bui Xuan Phai's works on display for first time

Sixty works by late famous painter Bui Xuan Phai, many of which were created toward the end of his life, are on display in Ho Chi Minh City.

5-year-old Hanoian conquers highest mountains in Vietnam

Dang Quang Vinh, together with his parents, has climbed the five highest mountains in Vietnam, including Lao Than, Lung Cung and Nhiu Co San, which even adults dare not climb.

Belgian comic artist, musician to attend Hue Festival 2022

Belgian comic artist Dany and musician-singer Konoba will represent artists from the Wallonie-Bruxelles region at Hue Festival 2022, according to the Wallonie-Bruxelles delegation in Vietnam.

Family has 3 kids with small stature

The family of Doan Thi Nhan in Hoang Viet hamlet, Tan Phuoc commune of Tan Hong district in Dong Thap, in the Mekong Delta, has a number of children with small stature.

Vietnamese player wins first int’l badminton title at Croatia Open

Vu Thi Anh Thu of Vietnam secured a gold medal in the Croatia Open badminton tournament on June 23 in Dubrovnik.

Face masks and community immunity

Recently, I visited a government agency. The security guards, who were not wearing face masks, did not allow me to enter the agency because I did not have a mask.