Tasty drinks: A man protects himself from the sun as he transports goods on his motorbike in Hanoi. The Finance Ministry’s proposed tax on sugary drinks is causing quite a stir across the nation. — AFP
HANOI: The impact of the imposition or increases in the special consumption tax on several products must be studied carefully to ensure sustained state revenue and the development of production and business, experts say.
Dau Anh Tuan, deputy general-secretary of the Vietnam Chamber of Commerce and Industry (VCCI) said that the Finance Ministry has requested the government amend the law on special consumption tax.
The highlight of the proposal was expanding the base for the special consumption tax, which aims to levy excise taxes on products and services, including sugary soft drinks, barley beverages, new tobacco products and online games.
Tuan said that mixed opinions were arising around the proposal, especially the imposition on sugary beverages, which the Finance Ministry said aimed to protect the health of the people and prevent obesity.
According to Nguyen Minh Thao, head of the Business Environment and Competitiveness Research Department under the Central Institute for Economic Management, it is necessary to study the impacts of the imposition of a special consumption tax on sugary beverages.
Thao questioned whether the targets of the policy, including public health and budget revenue, could be achieved, especially given that businesses are in a lot of difficulty.
There were about 1,800 production establishments in the beverage industry, which provided some 300,000 jobs.
Thao said that the imposition of a special consumption tax on the beverage industry could have negative impacts, such as higher prices and lower consumer demand, which would result in a lower contribution to the budget.
She said that the imposition of a 10% special consumption tax rate on sugary drinks would cause drops in output, gross domestic product, the income of workers, and the budget.
It was estimated that the 10% excise tax rate on sugary drinks would bring in additional revenue of nearly Vietnamese dong 2.28 trillion (RM450mil) but cause a decrease of Vietnamese dong 3.16 trillion (RM623.7mil) for the beverage and sugar industries.
The impacts would also spread to thousands of workers in the value chains of the industry, around 9,000 small and medium enterprises, and one million business households.
Nguyen Van Viet, chairman of the Alcohol Beer Beverage Association, said that inappropriate tax reforms would significantly affect the recovery of enterprises and growth targets, especially in the context of economic difficulty.
Vu Tu Thanh, deputy director of the US–Asean Business Council, said that there were 45 countries around the world that levied a special consumption tax on sugary drinks.
However, experiences in some countries showed that the policies were not as effective as expected in preventing obesity.
For example, in Chile, the obesity rates in men and women were 19.2% and 30.7%, respectively, in the 2009 and 2010 period. After the imposition of a special consumption tax on soft drinks in 2014, the obesity rates increased to 30.3% and 38.4%, respectively, in the 2016 and 2017 period.
According to Nguyen Thi Lam, former deputy director of the National Institute of Nutrition, there are a number of causes of obesity, such as unhealthy nutrition and a lack of exercise.
Soft drinks were not the only source of calories in foods, she said, adding that the imposition of an excise tax on sugary drinks might not be able to solve the problem of weight gain and obesity.
She cited a study that found that sugary drinks only accounted for an average of 1.1% of the total calories from food and beverages.
The Asean Food Security and Nutrition Report in 2021 found that sugary foods and sweets in general only provide about 3.6% of the total energy intake from food and beverages, while the most energy-rich sources were cereals (51.4%), meat (15.5%) and other foods (11.5%), including vegetables and fruits (6.9%).
She said the levy of an excise tax on sugary beverages would not be able to solve the problem of weight gain and obesity because many foods on the market contain sugar and calories.
Tran Ngoc Trung, head of the legal department of the American Chamber of Commerce, said that sugar was a special commodity that enjoyed protection policies such as quotas, anti-dumping and subsidy policies.
Thus, the imposition of an excise tax on sugary products would go against the policy of promoting the development of the sugar industry. — Viet Nam News/ANN
