National Assembly legislators have demanded a further increase in luxury tax on cigarettes and passenger cars to discourage their consumption. During discussions on amendments to the Luxury Tax Law, most National Assembly deputies were unhappy with the proposed luxury tax rates on cigarettes of 55% from next year and 65% from 2008.
Calling the rates too low, deputy Nguyen Thi Bang Thanh said: “There is no need to worry about levying high luxury tax on the product.”
“Vietnam reportedly spends nine trillion dong (US$570 million) a year on treatment of cigarette-related diseases while the tobacco industry’s annual revenue is 8.3 trillion dong,” she said.
She called for including cigarettes in the highest luxury tax bracket of 75% at a minimum.
Some 40,000 deaths were caused by such diseases each year, deputy Nguyen Lan Dung said.
Nguyen Hoang Anh said people’s health rather than the tobacco industry’s profits should be the priority. He suggested a rate of 65% in 2006-07 and 75-80% in 2008.
Many deputies also called for increasing luxury tax on cars with less than five seats.
The finance ministry had suggested a 50% rate keeping in mind Vietnam’s efforts to integrate but the lawmakers called for an 80% tax.
Rich people: reason
“Cars are mainly used by the rich or purchased by the State for official use, their consumption should not be encouraged,” deputy Le Quoc Dung said.
Nguyen Hoang Anh said another factor was to reduce gridlocks. “Traffic jams are now a major problem, especially in big cities. If [Vietnam] continues to allow the import and assembly of cars like now, street conditions will collapse.”
Dung agreed saying it was needed to learn from Thailand, where traffic jams used to be a chronic problem, and China’s Kunming city, where buses were popular on streets.
When the issue of luxury tax on alcoholic drinks came up for discussion, deputies opposed cuts again saying they were consumed mainly by the rich.
The government proposes reducing the tax on 40 proof alcoholic beverages to 65% from the current 75%.
Dung also objected to hiking the tax on 20 proof alcoholic types and less and draught beer on health grounds.
“They are good for health,” he said.