On the afternoon of November 27, during a discussion at the National Assembly hall about the draft Law on Special Consumption Tax (amended), although the proposal to impose special consumption tax was agreed upon by many delegates for the reason of protecting health and increasing budget revenue, many opinions were also concerned about the long-term impact on businesses and the economy.
Speaking at the meeting, delegate Huynh Thi Phuc (Ba Ria-Vung Tau) expressed her opinion that the application of the draft special consumption tax schedule with high tax increases may increase state budget revenue in the short term, but in the medium and long term it may reduce consumer demand, reduce business revenue and profits. Thereby, the result will be a reduction in value added tax and corporate income tax.
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| Delegate Huynh Thi Phuc - National Assembly Delegation of Ba Ria-Vung Tau province. (Photo: Duy Linh) |
According to the delegate, the speed of tax increase on beer and alcohol products makes it impossible for businesses that have invested in our country, especially newly invested modern factories that have not yet used their full capacity, to adjust production capacity in a short time.
With the decrease in consumption output due to health and traffic safety requirements recently applied, delegate Huynh Thi Phuc said that if the special consumption tax rate continues to be applied in the future, it will certainly have a great impact on factories, workers, and both value added tax and corporate income tax.
Therefore, it is necessary to assess the impact and consider more carefully before deciding on the time of application and to develop a reasonable tax rate adjustment roadmap to be able to regulate consumption but also not negatively affect the production and business activities of enterprises and the working life of workers.
Delegates recommended that the special consumption tax rate should be determined reasonably to ensure effective and sustainable state budget revenue without putting pressure on macroeconomic factors of the economy.
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| Delegate Pham Van Hoa (Dong Thap) speaks. (Photo: Duy Linh) |
Sharing the same view, delegate Pham Van Hoa (Dong Thap) said that in the context of current difficulties for businesses, the increase in special consumption tax needs to be implemented according to a certain roadmap to create conditions for businesses to "happily and satisfiedly" pay taxes without leading to the risk of "bankruptcy".
“Here I want to say that the two main products that are not encouraged and welcomed are alcohol, beer and cigarettes, but these two products contribute a lot to the budget. If we increase according to the plan proposed by the Government, we may be able to suffocate these two industries, while the illegal import of alcohol, beer and cigarettes into Vietnam has not been thoroughly controlled. If we increase taxes, smuggled goods will flood in,” the delegate stated.
Regarding alcohol and beer, delegates agreed on the view of increasing special consumption tax but emphasized that there must be a roadmap for companies to be prepared. Therefore, delegates suggested that further research on this issue is needed.
“Alcohol, beer, and tobacco products are subject to corporate income tax, environmental fees, and fees for preventing the harmful effects of tobacco, alcohol, and beer. If they suddenly increase like this, it will be very difficult for businesses to operate. I suggest that we pay attention to this issue,” said Mr. Hoa.
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| Scene of the National Assembly discussion session on the afternoon of November 27. (Photo: Duy Linh) |
Delegate Nguyen Manh Cuong (Quang Binh) also expressed concern that increasing taxes too high and too quickly would lead to increased smuggling, causing serious consequences for society and failing to achieve the goal of reducing demand.
These limitations cannot be overcome overnight, but require high determination, time, and a certain roadmap. According to the delegate, increasing taxes while anti-smuggling efforts have not met requirements will be a matter of utmost consideration to avoid harmful consequences.
Therefore, delegates suggested considering the level and roadmap for increasing special consumption tax on alcohol and beer in the context of the complicated situation of alcohol and beer smuggling.
Additional policies need careful consideration
Speaking at the discussion session, delegate Cam Thi Man was interested in adding soft drinks according to Vietnamese Standards (TCVN) with sugar content above 5g/100ml to the list of subjects subject to special consumption tax at a tax rate of 10%.
Delegates agreed to add this product to the list of subjects subject to special consumption tax to help guide consumption, expand the mechanism to encourage businesses and consumers to switch to other sugar-free products, and contribute to limiting overweight, obesity and non-communicable diseases.
However, the impact assessment research report stated that the beverage industry accounts for 38% of the number of enterprises in the beverage industry. Regarding the impact on budget revenue, the calculation results show that when applying a 10% special consumption tax, the production scale of enterprises is narrowed. At the same time, the imposition of tax not only affects the beverage industry, but also affects 24 other industries in inter-industry relations. The consequences affect the entire economy, leading to a decline in GDP.
Therefore, the delegate believes that it is necessary to balance the goal of guiding consumer behavior with the production and business of enterprises trading in this item. The government needs to explain more clearly the goal of achieving this policy, whether it is actually to protect people's health or just to increase budget revenue.
Therefore, policy additions need to be carefully considered for smooth implementation, while businesses have time to develop business strategies and adapt promptly.
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| Delegate Nguyen Thi Le Thuy - National Assembly Delegation of Ben Tre province. (Photo: Duy Linh) |
Delegate Nguyen Thi Le Thuy (Ben Tre) also suggested that the drafting agency should carefully consider the application of special consumption tax on sugary drinks. The delegate cited that, according to the Impact Assessment Report of the Ministry of Finance, in recent years, the consumption rate of sugary drinks in our country has decreased even though there is no need to apply tax...
The delegate emphasized that in practice, not every country that imposes special consumption tax on sugary soft drinks achieves the goal of reducing overweight and obesity rates.
Therefore, delegates said that applying special consumption tax on sugary soft drinks may reduce consumption of sugary drinks but is unlikely to reduce the rate of overweight, obesity and other non-communicable diseases.
Therefore, delegates suggested that it is necessary to thoroughly and comprehensively assess the impact on the effectiveness of adding sugary soft drinks according to TCVN to the subjects subject to special consumption tax to ensure the policy's goal is to protect people's health.
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| Deputy Prime Minister and Minister of Finance Ho Duc Phoc explained and clarified a number of issues raised by National Assembly deputies. (Photo: Duy Linh) |
Explaining the opinions of delegates on the special consumption tax on sugary soft drinks, Deputy Prime Minister and Minister of Finance Ho Duc Phoc said that this tax is aimed at ensuring people's health, in accordance with international practices.
Sugar content standards will be set by the Government, and products such as coconut water, milk, and pure fruit juice will not be subject to tax.
Regarding the special consumption tax on cigarettes, according to the Deputy Prime Minister, cigarettes cause serious consequences, each year about 40,000 people die from smoking, and Vietnam has to spend about 1 billion USD to treat related diseases.
Meanwhile, the price of cigarettes in Vietnam is very low, only about 6,000-0,000 VND/pack, in Singapore it is 200,000 VND/pack. In addition to cigarettes, other products such as cigars, tobacco for smoking, snuffing, chewing, and sniffing will also be subject to a special consumption tax of 75%.
Regarding the special consumption tax on air conditioners, the Deputy Prime Minister said that taxing air conditioners also aims to limit the use of fossil energy, which affects climate change and substances that are harmful to the ozone layer.
Source: https://baodaknong.vn/can-nhac-lo-trinh-va-tac-dong-khi-ap-thue-tieu-thu-dac-biet-doi-voi-ruou-bia-235434.html
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