Impact of Higher Tobacco Tax in Vietnam
Author Information
Author(s): Van Kinh Hoang, Ross Hana, Levy David, Minh Nguyen Thac, Ngoc Vu Thi Bich
Primary Institution: Vietnam Commercial University
Hypothesis
How does a uniform tobacco tax affect smoking rates and government revenue in Vietnam?
Conclusion
Imposing a uniform tobacco tax of 65% could reduce tobacco consumption by 25% and increase government revenue by 11.5%.
Supporting Evidence
- Most smokers in Vietnam consume low-priced cigarettes.
- Low-income households spend a larger proportion of their income on tobacco compared to higher-income households.
- Raising the price of cigarettes leads to a significant reduction in smoking rates, especially among low-income groups.
- Government revenues from tobacco taxes could increase despite a reduction in consumption.
Takeaway
If the government raises the tax on cigarettes, fewer people will smoke, and the government will make more money from taxes.
Methodology
Cross-sectional data from the Vietnam Living Standard Survey was used to analyze smoking behavior and estimate price elasticity of demand.
Potential Biases
Possible underreporting of smoking among women and youth.
Limitations
Income reporting may be inaccurate, and potential substitution to pipe smoking was not fully accounted for.
Participant Demographics
Participants included 28,518 individuals from 6,000 households across various income quintiles and regions in Vietnam.
Statistical Information
P-Value
-0.94 for overall male participation in smoking
Statistical Significance
p<0.05
Digital Object Identifier (DOI)
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