Debate continues over tax on gasoline, air conditioners, alcohol, tobacco

Continuing the agenda on the morning of March 26, the 7th meeting of full-time National Assembly deputies discussed the draft amendments to the Special Consumption Tax (SCT) Law.

Gasoline, air conditioners, alcohol, and tobacco remain key items subject to SCT, drawing significant attention from deputies.

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Vice Chairman of the NA Nguyen Duc Hai chairs the 7th meeting of full-time NA deputies.

Emphasizing that the primary purpose of SCT is to change consumer behavior rather than increase revenue, Deputy Hoang Van Cuong (Hanoi) pointed out that certain provisions in the draft do not align with this principle. “The draft still considers taxing air conditioners, even though it mentions ‘careful consideration.’ But in what direction? Air conditioners are now essential and widely used. Taxing them will not stop people from using them,” he stated.

Deputy Nguyen Truong Giang (Dak Nong) agreed, adding, “It is important to clarify the direction rather than leaving it open-ended.”

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Deputies at the meeting

Regarding tobacco and alcohol products, Deputy Hoang Van Cuong supported taxation but raised concerns about the tax calculation method. He compared the proposed gradual tax increases—5 percent annually for alcohol and an additional VND1,000 per cigarette pack—to "placing a frog in cold water and slowly heating it up." He argued that small, incremental tax hikes would not immediately influence behavior, and by the time consumers felt the impact, it would be too late. Instead, he suggested that tax increases should be substantial enough to prompt consumers to reconsider their consumption habits.

Deputy Do Thi Lan, Deputy Head of the NA's Social Affairs Committee, supported revising the draft law to include an absolute tax rate for cigarette packs containing 20 sticks and cigars weighing 20g per stick. For cigarette packs with different quantities, she proposed authorizing the Government to provide specific guidelines after reporting to the Standing Committee of the NA.

To ensure consistency in tobacco-related legislation and establish a legal framework for tobacco control, business investment, and import-export regulations, she urged the NA and the Government to promptly amend the Law on Prevention and Control of Tobacco Harms.

Some deputies continued to propose exempting gasoline from the SCT. Deputy Nguyen Truong Giang (Dak Nong) emphasized that gasoline is an essential commodity, and its use cannot be restricted. He also pointed out that gasoline is already subject to both SCT and the Environmental Protection Tax. If the goal is to address environmental concerns, he argued, adjustments should be made through the Environmental Protection Tax rather than imposing SCT.

At the session, Deputy Minister of Finance Cao Anh Tuan reiterated that SCT is intended to regulate consumer behavior. Regarding air conditioners, he acknowledged that while they were once considered luxury items, they are now widely used. As a result, the drafting committee will work with relevant agencies to reassess and propose a more suitable regulatory approach.

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Deputy Minister of Finance Cao Anh Tuan

On gasoline, he noted that SCT has been applied for a long time and that many countries impose both SCT (as a percentage) and the Environmental Protection Tax (at a fixed rate). Additionally, he highlighted that the proposed tax rate for biofuel gasoline is set lower to encourage its use.

Chairing the discussion, Vice Chairman of the NA Nguyen Duc Hai requested that the drafting committee provide specific revisions to reflect the deputies’ recommendations.

The revised draft sets the SCT rates on tobacco products as follows:

Starting in 2026, the tax on cigarettes will be VND5,000 per pack. From 2027 to 2029, it will increase by VND1,000 annually, reaching VND10,000 per pack by 2030.

For cigars, the tax will be VND50,000 per stick in 2026, with an annual increase of VND10,000 from 2027 to 2029, reaching VND100,000 per stick by 2030.

For loose tobacco, rustic tobacco, and other forms, the tax will start at VND50,000 per 100g or 100ml in 2026. From 2027 to 2029, it will rise by VND10,000 per year, reaching VND100,000 by 2030.

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