The draft Law on special consumption tax on sugary drinks has caused controversy with mixed opinions, in which experts say that this does more harm than good.
Taxing soft drinks, potential economic and social consequences
The imposition of special consumption tax (SCT) on sugary drinks in Vietnam is receiving mixed opinions. Among them, there is a view that imposing special consumption tax on sugary drinks does not help achieve health and economic goals but even causes great damage to many supporting industries and the economy in general.
According to the Research Report of the Central Institute for Development Studies (CIEM) on assessing the socio-economic impact of special consumption tax, if sugary soft drinks are added to the list of special consumption tax with a tax rate of 10%, the economy will suffer losses of up to VND880.4 billion.
Mr. Nguyen Van Phung - Standing Member of the Executive Committee of the Vietnam Association of Accountants and Auditors shared in the "Scientific Workshop on Non-communicable Diseases in Vietnam: Causes and Recommendations for Prevention and Control", organized by the Vietnam Association for Community Health Care Education (VACHE), his concern about the imposition of special consumption tax on soft drinks does not help achieve the goal of increasing the national budget, but on the contrary, has a significant impact on the soft drink industry and other industries. supporting industry related industries such as sugar, retail, packaging, and logistics.
Businesses are currently having to bear many types of taxes and costs at the same time such as value added tax, import and export tax, recycling fees, waste treatment fees, costs to carry out greenhouse gas inventory responsibilities, fees for emissions, wastewater fees (being prepared to be added). These types of costs will greatly increase the financial burden for businesses, especially in the context of businesses still struggling with the recovery process after the pandemic and the general difficulties of the global economy.
Controversy over effectiveness in improving population health
Ministry of Finance stated the reasons for proposing a special consumption tax on sugary drinks, with the aim of controlling overweight and obesity, protecting public health. However, the effectiveness of this proposal is not convincing enough.
The first, There is not enough scientific evidence to show that soft drinks are the direct cause of overweight and obesity. Associate Professor, Dr. Nguyen Thi Lam - Former Deputy Director of the National Institute of Nutrition said that the main reasons for overweight and obesity include an unreasonable diet (consuming a lot of high-calorie foods), lack of physical activity, genetics or hormones.
A report by the Institute of Nutrition showed that in Vietnam, the rate of overweight and obesity in urban students is much higher than that of rural students (41.9% and 17.8%, respectively), but the rate of regular soft drink consumption among urban children is lower than that of rural children (16.1% and 21.6%, respectively).
Monday, Imposing excise taxes on soft drinks does not guarantee to solve non-communicable diseases, including overweight and obesity.
Specifically, Mr. Nguyen Van Phung said that if a tax is imposed on each sugary beverage, consumers can still switch to other alternative foods, which can also be the cause of non-communicable diseases. Tax tools in this case are difficult to change consumer behavior and can even create conditions for smuggled goods and street foods that are not controlled in terms of quality.
Ms. Nguyen Minh Thao - Head of the Department of Business Environment and Competitiveness Research, Central Institute for Economic Management (CIEM) - said that in the context of Vietnam's economy facing many challenges, imposing special consumption tax on beverage Roads need to be carefully considered to avoid unwanted consequences. The government also needs to carefully consider socio-economic factors and come up with appropriate policies to protect public health without causing damage to the economy.
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