Illicit Cigarette Consumption and Government Revenue Loss in Vietnam: Evidence from a Primary Data Approach

Minh T. Nguyen, Son The Dao, Nga Que Nguyen, Mike Bowling, Hana Ross and Anthony D. So
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Minh T. Nguyen: Department of Economics, Ball State University, Muncie, IN 47306, USA
Son The Dao: Department of Economics, Thuongmai University, Hanoi 10000, Vietnam
Nga Que Nguyen: Vietnam Academy of Social Sciences, Hanoi 10000, Vietnam
Mike Bowling: Department of Health Behavior, University of North Carolina-Chapel Hill, Chapel Hill, NC 27599, USA
Hana Ross: School of Economics, University of Cape Town, Rondebosch 7700, South Africa
Anthony D. So: Innovation+Design Enabling Access (IDEA) Initiative, Department of International Health, Johns Hopkins Bloomberg School of Public Health, Baltimore, MD 21205, USA

IJERPH, 2019, vol. 16, issue 11, 1-12

Abstract: This article provides the first comprehensive picture and independent estimates of both illicit cigarette consumption and the resulting government tax revenue loss in Vietnam using data from a representative survey of cigarette smokers in 12 Vietnamese provinces. The survey consisted of face-to-face interviews and on-site cigarette pack examinations. We find that more than 720 million illicit cigarette packs, or 20.7% of total cigarette consumption, circulated in Vietnam in 2012. Consequently, government tax revenue loss due to illicit trade ranged from US $223 to 295 million. Our estimates also indicate that (1) the most popular illicit brands were Jet and Hero, both were sold at higher prices than the average legal brand; (2) the average price of illicit cigarettes was 51% higher than the average price of legal cigarettes; and (3) majority of illicit cigarettes were sold at convenience stores, which were registered and licensed businesses. Our findings suggest that prices are not a driver of illicit cigarette consumption in Vietnam, and this illicit trade is at least partially a consequence of weak market control enforcement.

Keywords: Illicit trade; tobacco; tax avoidance; cigarette smuggling; cigarette price; primary data; pack examination; Vietnam (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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