Background:
Vietnam revised the Excise Tax Law in 2014 leading to an increase of the cigarette excise tax rate from 65% of ex-factory price to 70% in January 2016, and to 75% in January 2019. The government plans to make other excise tax reforms in 2018. This study explored the impacts of 2014 Excise Tax Law on cigarette retail price, affordability, sale volumes and government tax revenue for 2016 and expected impacts for 2017-2019.

Methods:
Relative Income Price (RIP) was used to measure the affordability of cigarettes. The retail price of three popular brands, between 1998 and 2016, was collected from government secondary data.
The WHO Tobacco Tax Simulation model was used to assess real and expected impacts of tobacco tax from 2016-2019

Results:
The nominal prices of three cigarette brands have increased between 1998 and 2016, but the inflation-adjusted retail prices have decreased, which indicates an increase in cigarette affordability.
The average inflation-adjusted retail price of cigarettes increased by 11% in 2016 and will be about 14% (1,500 Vietnam Dong) higher in 2019 compared to 2015.
Cigarette retail sale volumes decreased by 4% in 2016, but are projected to steadily increase from 2016 to 2019 by 2.3% (88 million packs).
Total inflation-adjusted tax revenue from cigarettes increased by 4% in 2016, but will be 13% (1,988 billion Vietnam Dong) higher in 2019 compared to 2015.

Conclusions:
Despite the increase in excise tax in the 2014 Excise Tax Law, cigarettes are becoming more affordable as a result of inflation and income growth. The real retail price and tax revenues increased only for the years of tax increase. The sales volume decreased slightly in 2016 but is expected to keep increasing from 2017-2019. Tobacco taxes should be increased at a higher rate and more frequently at least to keep up with inflation and income growth.