The effect of imposing a higher, uniform tobacco tax in Vietnam

Price elasticity of cigarette smoking in Bangladesh: evidence from the Global Adult Tobacco Surveys (GATS)

INTRODUCTION

The overall prevalence of cigarette smoking has not changed significantly for over a decade in Bangladesh. Raising the price of cigarettes through taxation is an important policy instrument for reducing consumption and achieving public health goals. The price elasticity of cigarette demand is an important parameter for evaluating the effectiveness of raising prices through tax increases in reducing cigarette consumption. The objective of the study was to estimate the price elasticity of cigarette demand in Bangladesh using Global Adult Tobacco Survey 2009 and 2017 data.

METHODS

Smoking prevalence and smoking intensity were estimated using a two-part model. Endogeneity of prices was minimised using the average consumption-weighted cigarette price in a cluster, for both smokers and non-smokers residing in a specific cluster.

RESULTS

Cigarette demand was found to be price inelastic and ranged between -0.51 and -0.73. It is also price inelastic across wealth groups and areas of residence in Bangladesh. Although the total price elasticity did not differ considerably between rural and urban locations, it is evident that individuals in the lower-wealth group are more than twice as responsive to price increases as their high-wealth counterparts.

CONCLUSION

A significant increase in cigarette prices through a tax increase would decrease smoking prevalence and increase tax revenue in Bangladesh. The greater price sensitivity among smokers in lower-wealth groups indicates that a tax-induced cigarette price increase would provide more health benefits to them, thereby contributing to improved health equity.

Socioeconomic differences in the impact of prices and taxes on tobacco use in low- and middle-income countries-A systematic review

There is indisputable evidence that increases in taxes that raise tobacco prices reduce tobacco use. Consumption taxes on manufactured tobacco products, however, can be regressive in socioeconomic status (e.g., when the ratio of tax paid to income is lower for higher-income groups than for lower-income groups). Nevertheless, if the poor or less educated are more price responsive, a change in tobacco tax may be progressive in socioeconomic status. Existing reviews clearly indicate that populations with lower income or education are more responsive to tobacco tax and price changes than higher-income and more educated populations in high-income countries. Research pertaining to low- and middle-income countries was, however, limited and inconclusive. We conducted a review of quantitative studies that examined if socioeconomic status modified the association between prices and taxes and tobacco use in low- and middle-income countries. We searched two electronic databases, two search engines, and two working paper repositories. At least two reviewers independently screened articles for inclusion, extracted detailed characteristics, and assessed the risk of bias of each included study. Thirty-two studies met our inclusion criteria. Overall, we found that the evidence in low- and middle-income countries was too limited and methodologically weak to make any conclusive statements. Our review highlights a number of data and methodological limitations in existing studies. The most important limitation was the lack of formal assessment of socioeconomic differences in price responsiveness. Only seven of 32 studies assessed statistically whether own-price effects were modified by socioeconomic status. Many modelling studies have examined the distributional effect of a tax increase on tobacco use, while assuming a strong own-price elasticity gradient in income. The poor were generally assumed to be more responsive to price by a factor of two to five, relative to the wealthy. Although there are theoretical reasons to expect poorer individuals to be more responsive to monetary prices than wealthy ones in low- and middle-income countries, our review provides little empirical support.

Income and cigarette price responsiveness: evidence from Vietnam

BACKGROUND

Vietnam has an ad valorem tobacco excise structure, with the tax base being factory gate price, making the excise susceptible to tax avoidance and less effective in reducing tobacco use. To address these issues, therefore, the government has considered switching to a mixed system in which a specific rate would be imposed on every cigarette pack in addition to the existing ad valorem rate. However, little is known about how smokers with different incomes respond to price increases in Vietnam, raising the concern of regressivity of the tax reform.

OBJECTIVES

This paper aims to provide timely and more updated evidence to support policy discussion on tobacco excise tax reform.

METHODS

The study relies on the smokers' stated preferences, which are elicited from the Tobacco Consumption Survey in Vietnam in 2017-2018. We use data on actual purchases and the stated maximum prices that smokers are willing to pay for their cigarette brands to calculate conditional price elasticity at the individual level. Regression analysis then is used to quantify the extent to which income and other socioeconomic characteristics shape the smokers' price sensitivity.

RESULTS

Both the individual incomes and household incomes have negative and significant effects on the price elasticity of conditional demand for cigarettes. This effect is particularly strong after taking the product heterogeneity into account by considering only the most popular brand, but becomes smaller when looking at a more heterogeneous market by excluding that brand from the original sample. The magnitude of the impact of income adjusted for cigarette price is much higher than unadjusted income. The implication is that with sufficiently large variation in price across cigarette brands, which are often the case for countries with ad valorem tobacco excise tax structures, the low-income smokers may not be more sensitive to cigarette price than the high-income smokers so that a uniform percentage increase does not necessarily result in larger consumption fall for the low-income smokers. Narrowing the price gaps between cigarette brands by adding a specific tax component can help address this issue.

CONCLUSION

Raising tobacco tax can make the tax policy more progressive and benefit the poor more than the rich in Vietnam. Thus, the Government of Vietnam should switch from the current, purely ad valorem excise tax structure to the mixed system to reduce price variation and make the tobacco tax more progressive.

Cost-Effectiveness of Population-Based Tobacco Control Interventions on the Health Burden of Cardiovascular Diseases in Vietnam

This study sought to assess the cost-effectiveness of population-based tobacco control interventions, which included health promotion and education, smoke-free models, cessation programs, warning on package, marketing bans, and raising tax. Standardized activity-based costing ingredient approach was applied with the provider perspective to calculate interventions cost from 2013 to 2017. The potential health impacts of the aforementioned interventions were calculated through a Microsoft Excel-based modeling adapted from Higashi et al and Ngalesoni et al. All six population-based tobacco control interventions were highly cost-effective with ranges from 1405 VND (Vietnamese Dong) to 135 560 VND per DALY (disability-adjusted life year) averted. It was identified that raising cigarette taxes and applying health warnings on tobacco packages are the most favorable, cost-effective interventions. The results from this study provide a robust message that calls for increased attention and efforts in developing an appropriate policy agenda, which jointly integrates both political and community-based interventions, to maximize intervention impact on tobacco use.

The effect of price on cigarette consumption, distribution, and sale in Tehran: a qualitative study

Background

Appropriate increases in tobacco taxes and prices are an essential component of comprehensive tobacco control strategies. This study investigates factors related to the use, sale, and distribution of cigarettes in Iran, focusing on the relationship between cigarette price and its consumption.

Methods

This interview-based qualitative study was conducted among 20 participants, including cigarette smokers, retail shop owners, large-scale distributors, and an expert in tobacco control research.

Results

Seven themes were extracted from participant interviews, including the type and price of cigarette, the best time to sell cigarettes, profits from the sale of cigarette, affordability, rise in cigarette price and smokers’ reaction to it, lobbying and black-market sales of cigarettes, and the sale and distribution of cigarettes across the country. Although the price of cigarettes in Iran has shown some increases in the past decade, the timing of these increases are not predictable and the limited amount of these increases has not reduced the use of cigarettes. Following a price increase, consumers are more likely to switch from buying packets to single cigarettes, or buy a less expensive brand, then to quit. Moreover, increases in prices may encourage smokers and sellers to buy a large number of cigarettes and store them for a rainy day. Another adverse effect may be increased smuggling of illicit cigarettes to balance the pressure caused by rising prices.

Conclusions

Our findings highlight two important aspects concerning cigarette pricing in Iran. First is the change in the type of purchase from the whole box of cigarettes to the single stick cigarette or swapping to less expensive cigarettes. Second, increase in cigarette price (either through taxing or regular increases) could be offset by flooding smuggled cigarettes into the market. Therefore, in addition to raising cigarette prices, reducing cigarette consumption rates in Iran requires the development and effective implementation of regulatory policies to control cigarette smuggling, reduce purchasing, and subsequently curb the use of this leading cause of premature morbidity and mortality.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12889-021-11733-5.

Inequality-Reducing Effects of Tobacco Tax Increase: Accounting for Behavioral Response of Low-, Middle-, and High-Income Households in Serbia

While previous research has indicated that increasing tobacco excises is a crucial instrument for lowering tobacco demand, this policy has been criticized for its alleged regressive impact on the poor. However, this critique does not take into account the behavioral response, i.e., decrease in consumption that occurs after excises and prices increase. In this paper, we examine the effect of cigarettes' price increase on tobacco consumption, household expenditures, and tax burdens in three income groups and provide empirical arguments on the regressivity/progressivity effects of tobacco tax increase. Estimated elasticities indicate that all groups decrease their cigarettes demand with increasing prices, with demand decrease stronger for low- than for middle- and high-income households. Results further suggest that increasing tobacco excises (1) decreases tobacco expenditure of low-income households, which increases their productive consumption, such as on food, clothes, etc., and (2) redistributes the tobacco tax burden from low- to high-income households. Therefore, excise increase policies do not have an adverse effect on the position of the low-income households; on the contrary, they lower their cigarettes expenditure and their tax burden, while lower cigarettes consumption has an additional, positive effect on their health, which attenuates future inequalities.

Impact of cigarette price increase on health and financing outcomes in Vietnam

Background: Vietnam had about 15 million male smokers in 2015. To reduce adult tobacco use in Vietnam through an increase in the excise tax of cigarettes, we conducted an extended cost-effectiveness analysis to examine the impact of two scenarios of cigarette price increases. Methods: We estimated, across income quintiles, the life-years gained, treatment cost averted, number of men avoiding catastrophic health expenditure and extreme poverty, and additional tax revenue under a 32% and a 62% increase in cigarette price through increased excise tax. We considered only male smokers as they constitute majority of the smokers. We used the average price elasticity of demand for cigarettes in Vietnam of -0.53. Results: Under both scenarios of price increase, men in the poorest quintile would gain about 2.8 times the life-years and avert 2.5 times the treatment cost averted by the richest quintile. With a 32% price increase, about 285,000 men would avoid catastrophic health expenditure; as a result, about 95,000 men, more than half of whom in the poorest quintile, would avoid falling into extreme poverty. In contrast to the distribution of health benefits, the extra revenue generated from men in the richest quintile would be 1.2 times that from the poorest quintile. With a 62% price increase, about 553,000 men would avoid catastrophic health expenditure, and about 183,000 men, more than half of whom in the poorest quintile, would avoid falling into extreme poverty. The extra revenue generated from men in the richest quintile would be 3.8 times that from the poorest quintile. Conclusions: Higher cigarette prices would particularly benefit the poorest income quintile of Vietnamese, in terms of health and financial outcomes. Thus, tobacco taxes are an effective way to improve health and reduce poverty in Vietnam.

Impact of cigarette price increase on health and financing outcomes in Vietnam

Background: Vietnam had about 15 million male smokers in 2015. To reduce adult tobacco use in Vietnam through an increase in the excise tax of cigarettes, we conducted an extended cost-effectiveness analysis to examine the impact of two scenarios of cigarette price increases. Methods: We estimated, across income quintiles, the life-years gained, treatment cost averted, number of men avoiding catastrophic health expenditure and extreme poverty, and additional tax revenue under a 32% and a 62% increase in cigarette price through increased excise tax. We considered only male smokers as they constitute majority of the smokers. We used the average price elasticity of demand for cigarettes in Vietnam of -0.53. Results: Under both scenarios of price increase, men in the poorest quintile would gain about 2.8 times the life-years and avert 2.5 times the treatment cost averted by the richest quintile. With a 32% price increase, about 285,000 men would avoid catastrophic health expenditure; as a result, about 95,000 men, more than half of whom in the poorest quintile, would avoid falling into extreme poverty. In contrast to the distribution of health benefits, the extra revenue generated from men in the richest quintile would be 1.2 times that from the poorest quintile. With a 62% price increase, about 553,000 men would avoid catastrophic health expenditure, and about 183,000 men, more than half of whom in the poorest quintile, would avoid falling into extreme poverty. The extra revenue generated from men in the richest quintile would be 3.8 times that from the poorest quintile. Conclusions: Higher cigarette prices would particularly benefit the poorest income quintile of Vietnamese, in terms of health and financial outcomes. Thus, tobacco taxes are an effective way to improve health and reduce poverty in Vietnam.

Cost-effectiveness analysis of population-based tobacco control strategies in the prevention of cardiovascular diseases in Tanzania

BACKGROUND

Tobacco consumption contributes significantly to the global burden of disease. The prevalence of smoking is estimated to be increasing in many low-income countries, including Tanzania, especially among women and youth. Even so, the implementation of tobacco control measures has been discouraging in the country. Efforts to foster investment in tobacco control are hindered by lack of evidence on what works and at what cost.

AIMS

We aim to estimate the cost and cost-effectiveness of population-based tobacco control strategies in the prevention of cardiovascular diseases (CVD) in Tanzania.

MATERIALS AND METHODS

A cost-effectiveness analysis was performed using an Excel-based Markov model, from a governmental perspective. We employed an ingredient approach and step-down methodologies in the costing exercise following a government perspective. Epidemiological data and efficacy inputs were derived from the literature. We used disability-adjusted life years (DALYs) averted as the outcome measure. A probabilistic sensitivity analysis was carried out with Ersatz to incorporate uncertainties in the model parameters.

RESULTS

Our model results showed that all five tobacco control strategies were very cost-effective since they fell below the ceiling ratio of one GDP per capita suggested by the WHO. Increase in tobacco taxes was the most cost-effective strategy, while a workplace smoking ban was the least cost-effective option, with a cost-effectiveness ratio of US$5 and US$267, respectively.

CONCLUSIONS

Even though all five interventions are deemed very cost-effective in the prevention of CVD in Tanzania, more research on budget impact analysis is required to further assess the government's ability to implement these interventions.

The relation between cigarette taxes and older adult smoking in Zhejiang and Gansu: what happened following the 2009 Chinese Tax adjustments?

Background

In May 2009, the Chinese government raised cigarette excise tax rates and adjusted standards for Grade A cigarettes and Grade B cigarettes. The present study aimed to examine the effects of the tax adjustments in 2009 on smoking behaviors and health outcomes among smokers aged above 45.

Methods

Data from the 2008 and 2012 China Health and Retirement Longitudinal Study of Zhejiang and Gansu provinces were used to estimate the influence of tax increase on the number of cigarettes smoked daily and health capital. The sample included 706 smokers who were 45 years old and older at the time of data collection in 2008. The sample group was surveyed again in 2012. The final sample size was 1366. Logit model was applied.

Results

Cigarette tax adjustment in 2009 resulted in the decrease in the likelihood of smoking 0–10 cigarettes per day by 1.06%; the increase in the likelihood of those smoking 11–20 cigarettes per day by 0.44%; and, those smoking 20 cigarettes or more by 0.63%; the decrease in the likelihood of good health by 0.47%; the increase in the prevalence of chronic disease by 1.34%.

Conclusions

The smoke tax adjustment in 2009 worsened individual unhealthy smoking behaviors and health outcomes. The proposed cigarette tax levied at the retail level can reduce the State Tobacco Monopoly Administration’s control overall and each price and increase the influence of the market on cigarette consumption in China.

Exploring the relationship between cigarette prices and smoking among adults: a cross-country study of low- and middle-income nations

INTRODUCTION

Evidence on the relationship between cigarette prices and adult smoking in low- and middle-income countries (LMICs) is relatively limited. This study offers new descriptive evidence on this relationship using data from a set of 13 LMICs.

METHODS

We use Global Adult Tobacco Survey (GATS) cross-country data from approximately 200,000 participants aged 15 and older. Estimates on the relationship between prices and adult smoking were obtained from logit models of smoking participation and ordinary least squares models of conditional cigarette demand.

RESULTS

Higher prices were associated with lower demand across countries, in terms of both smoking prevalence and daily number of cigarettes smoked among smokers. Our estimates suggest that the total price elasticity of cigarette demand in LMICs is approximately -0.53. We find that higher socioeconomic status (SES), represented through wealth and education effects is associated with lower chance of smoking overall, but among existing smokers, it may be associated with a larger number of cigarettes smoked.

CONCLUSIONS

After controlling for a set of individual demographic and country characteristics, cigarette prices retain a significant role in shaping cigarette demand across LMICs. Because higher SES is associated with a reduced chance of smoking overall but also with increased daily consumption among current smokers, optimal tobacco tax policies in LMICs may face an added need to accommodate to shifting SES structures within the populations of these countries.

The impact of tobacco prices on smoking onset in Vietnam: duration analyses of retrospective data

The benefits of preventing smoking onset are well known, and even just delaying smoking onset conveys benefits. Tobacco control policies are of critical importance to low-income countries with high smoking rates such as Vietnam where smoking prevalence is greater than 55 % in young men between the ages of 25 and 45. Using a survey of teens and young adults, I conducted duration analyses to explore the impact of tobacco price on smoking onset. The results suggest that tobacco prices in Vietnam have a statistically significant and fairly substantial effect on the onset of smoking. Increases in average tobacco prices, measured by an index of tobacco prices and by the prices of two popular brands, are found to delay smoking onset. Of particular interest is the finding that Vietnamese youth are more sensitive to changes in prices of a popular international brand that has had favourable tax treatment since the late 1990s.

Building capacity for implementation of the framework convention for tobacco control in Vietnam: lessons for developing countries

Effective implementation of the WHO international Framework Convention on Tobacco Control (FCTC) is the key to controlling the tobacco epidemic. Within countries, strong national tobacco control capacity is the primary determinant for successful implementation of the FCTC. This case study of tobacco control policy describes the experience of building national tobacco control capacity in Vietnam under the Reduce Smoking in Vietnam Partnership project within a national capacity-building framework. In the Vietnam experience, four components of tobacco control capacity emerged as especially important to achieve ‘quality’ outputs and measurable outcomes at the implementation level: (i) organizational structure/infrastructure; (ii) leadership and expertise; (iii) partnerships and networks and (iv) data and evidence from research. The experience gained in this project helps in adapting our tobacco control capacity-building model, and the lessons that emerged from this country case study can provide guidance to global funders, tobacco control technical assistance providers and nations as governments endeavor to meet their commitment to the FCTC.

Evidence and decision making: tobacco control policy and legislation in Vietnam

The Ministry of Health (MOH) in Vietnam is currently drafting the Tobacco Harm Prevention Law. The government requested the MOH to provide evidence on the strategies proposed in the draft law as part of its submission to the National Assembly. This study examines the availability and strength of evidence and its relationship to policy stakeholders' positions towards policy instruments proposed in the law. Several qualitative methods were employed including documentary analysis, key informant interviews, focus group discussion and a key stakeholders' survey. Contradictory findings were identified over the role of evidence. While there is high demand for local evidence, the availability and strength of evidence are not always aligned with stakeholders' positions with respect to different strategies. Stakeholders' positions are shaped by competing interests on the basis of their perceptions of the socioeconomic implications and health consequences of tobacco control. Claims of limited availability of evidence are often used to justify the maintenance of the status quo, a position that is seen to protect the state-owned tobacco industry and state revenue. Local evidence of the impact of tobacco on population health is argued to be 'one-sided' and evidence of selected interventions discounted. Compelling and comprehensive local evidence, including those addressing economic concerns, is acutely needed in order to proceed with the current legislation process. For evidence to play a critical role, it needs to engage those ministries responsible for the tobacco industry itself and the economic development.

Cost effectiveness of tobacco control policies in Vietnam: the case of population-level interventions

BACKGROUND

Tobacco smoking is one of the leading public health problems in the world. It is also possible to prevent and/or reduce the harm from tobacco use through the use of cost-effective tobacco control measures. However, most of this evidence comes from developed countries and little research has been conducted on this issue in developing countries.

OBJECTIVE

The objective of this study was to analyse the cost effectiveness of four population-level tobacco control interventions in Vietnam.

METHODS

Four tobacco control interventions were evaluated: excise tax increase; graphic warning labels on cigarette packs; mass media campaigns; and smoking bans (in public or in work places). A multi-state life table model was constructed in Microsoft® Excel to examine the cost effectiveness of the tobacco control intervention options. A government perspective was adopted, with costing conducted using a bottom-up approach. Health improvement was considered in terms of disability-adjusted life-years (DALYs) averted. All assumptions were subject to sensitivity and uncertainty analysis.

RESULTS

All the interventions fell within the definition of being very cost effective according to the threshold level suggested by the WHO (i.e. <GDP per capita). Graphic warning labels on cigarette packs was the most cost-effective option, followed by excise tax increases, mass media campaigns, public smoking bans and work place smoking bans. If the cost offset was included in the analysis, all interventions would provide cost savings to the government health sector.

CONCLUSIONS

All four interventions to reduce the harm from tobacco use appear to be highly cost effective and should be considered as priorities in the context of Vietnam. The government may initially consider graphic warning labels and tax increase, followed by other interventions.

Revenue implications to the Vietnamese government of using taxes to curb cigarette smoking

This study explores the impact on government taxation revenue from increasing excise on cigarettes in Vietnam. A dynamic population model is used to estimate future patterns (both prevalence and consumption) of tobacco use in Vietnam, with and without changes to tobacco excise for the period 2006-2016. Three increases in the base case excise tax rate of 55% are modelled: 65%, 75% and 90%. Various price elasticities are used to examine variations in cigarette consumption while cross price elasticities are used to explore shifts from cigarette to other forms of tobacco. Revenue implications for the period 2006-2016 are reported as discounted net present values (NPV) in 2006 values. The model predicts that smoking rates in 2016, for both males and females, are marginally lower than base case estimates for all taxation excise options with higher price elasticities generating greater reductions in prevalence. In all cases, compared to base case estimates, the results indicate a fall in number of smokers, a reduction in amount of tobacco consumed and an increase in overall taxation revenue. The additional gain in government revenue, expressed in NPV terms, ranges from a low of VND 69,579 billion (or USD $4.35 billion) to a high of VND 108,492 billion (or USD $6.79 billion). Increases in tobacco excise provide an opportunity for the Vietnamese government to increase revenue at the same time as reducing tobacco consumption. Further research into the wider social and economic consequences of increasing tobacco excise in Vietnam is warranted.

Economic aspects of chronic diseases in Vietnam

Introduction

There remains a lack of information on economic aspects of chronic diseases. This paper, by gathering available and relevant research findings, aims to report and discuss current evidence on economic aspects of chronic diseases in Vietnam.

Methods

Data used in this paper were obtained from various information sources: international and national journal articles and studies, government documents and publications, web-based statistics and fact sheets.

Results

In Vietnam, chronic diseases were shown to be leading causes of deaths, accounting for 66% of all deaths in 2002. The burdens caused by chronic disease morbidity and risk factors are also substantial. Poorer people in Vietnam are more vulnerable to chronic diseases and their risk factors, other than being overweight. The estimated economic loss caused by chronic diseases for Vietnam in 2005 was about US$20 million (0.033% of annual national GDP). Chronic diseases were also shown to cause economic losses for families and individuals in Vietnam. Both population-wide and high-risk individual interventions against chronic disease were shown to be cost-effective in Vietnam.

Conclusion

Given the evidence from this study, actions to prevent chronic diseases in Vietnam are clearly urgent. Further research findings are required to give greater insights into economic aspects of chronic diseases in Vietnam.