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Empirical analysis on the illicit trade of cigarettes in Vietnam
  1. Hien Thi Thu Nguyen1,
  2. Long Thanh Giang2,3,
  3. Toan Ngoc Pham4
  1. 1Department of Economics, Thuongmai University, Hanoi, Viet Nam
  2. 2Faculty of Economics, National Economics University, Hanoi, Viet Nam
  3. 3TIMAS, Thang Long University, Hanoi, Viet Nam
  4. 4Center for Information, Strategic Analysis and Forecast, Institute of Labour Science and Social Affairs, Hanoi, Viet Nam
  1. Correspondence to Dr Hien Thi Thu Nguyen, Department of Economics, Thuongmai University, Hanoi, Viet Nam; chthuhien{at}tmu.edu.vn

Abstract

Background This paper examined how a higher tax on tobacco would affect illicit trade in Vietnam.

Methodology and data This paper used the gap method to estimate the gap between cigarette domestically tax-paid sales and domestic consumption. Data were from the tax-paid sales by the Vietnam Steering Committee on Smoking and Health (VINACOSH), the Vietnam Tobacco Association, the General Tax Department, as well as two rounds of the Global Adult Tobacco Survey in 2010 and 2015.

Key results The results indicated that Vietnam had a negative volume of illicit trade, either a result of under-reporting of tobacco use or due to net smuggling of tax-paid cigarettes out of the country. Furthermore, the trend showed an increased negative volume over time, which indicated that increases in tobacco taxes in the interleading years did not result in an increase in illicit trade in tobaccos in Vietnam.

Conclusions Vietnam’s low prices on domestic cigarettes created favourable conditions for cigarette smugglers and provided easy access to illicit cigarettes for the Vietnamese people, but the absence of a relationship between tax changes and smuggling suggested that potential increases in the excise tax should not be discouraged by the threat of an increase in illicit trade. The government should increase taxes on cigarettes to raise domestic cigarette prices and take strong policy measures to create a more transparent social environment, therefore effectively reducing the prevalence of illicit cigarettes in Vietnam.

  • taxation
  • economics
  • illegal tobacco products
  • public policy
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Footnotes

  • Contributors HTTN developed the idea for this research, provided the data analysis and prepared the first draft of the paper. LTG prepared the literature review, checked the data calculation and consistency, and revised and edited the full manuscript. TNP assisted with the data analysis on cigarette use.

  • Funding This paper was funded by the University of Illinois at Chicago’s Institute for Health Research and Policy through its partnership with Bloomberg Philanthropies.

  • Competing interests This paper was submitted as part of the Illicit Trade Supplement by Cancer Research UK and University of Illinois at Chicago.

  • Patient consent for publication Not required.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data availability statement Data are available upon reasonable request.

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