Can negatively impact many economic sectors

According to the Vietnam Federation of Commerce and Industry (VCCI), the 2008 Law on Special Consumption Tax has been amended and supplemented four times in 2014, 2016 and 2022 to suit the reality and tax management requirements in each period. The proposal to develop the draft Law on Special Consumption Tax (amended) is being drafted by the Ministry of Finance with many important amendments, which will have a great impact on businesses in the production, trading and consumption chain of goods and services subject to the law and consumers.

The Law on Special Consumption Tax (amended) adds a number of taxable subjects: Sugary soft drinks; barley drinks and non-alcoholic soft drinks; new tobacco products and new tobacco equipment, parts and solutions; online electronic game service business. In particular, adding sugary soft drinks to the taxable subjects of special consumption tax is for the reason of preventing and reducing the alarming situation of overweight and obesity in children; high risk for many non-communicable diseases, chronic diseases and premature death.

Heineken's beer and barley beverage factory in Vietnam. Photo: TUYET MINH

At the workshop to contribute ideas to the draft Law on Special Consumption Tax (amended) organized by VCCI on July 5, delegates discussed many important amendments that have a great impact on businesses in the production and business chain. One of the contents that most delegates were interested in at the workshop was the addition of sugary soft drinks to the list of subjects subject to special consumption tax. Many delegates said that there was not enough evidence and convincing scientific basis to affirm that applying this tax tool would help improve and enhance people's health, specifically preventing the risk of overweight and obesity. Meanwhile, this could cause negative impacts that spread to many economic sectors and life.

Associate Professor, Doctor, Doctor Nguyen Thi Lam, former Deputy Director of the National Institute of Nutrition, shared that there are many causes of overweight and obesity: Unhealthy diet such as consuming foods high in calories, sitting still for a long time, lack of exercise... There has been no research finding a sole link between overweight and obesity and sugary soft drinks. Sugary soft drinks are not the source of the most calories in foods.

Avoid creating policy risks for businesses

According to Dr. Nguyen Minh Thao, Head of the Department of Business Environment and Competitiveness Research, Central Institute for Economic Management, enterprises in general and enterprises in the beverage sector in particular are in a very difficult period. At this time, expanding the taxable subjects and increasing taxes (including special consumption tax) is not appropriate because it will create a burden, and can even make the difficulties of enterprises in the current context even more exhausted. Any policy has a certain socio-economic impact, so policy tools should not create additional burdens for the economy, enterprises and people. Dr. Nguyen Minh Thao recommends considering the roadmap for expanding the subjects of special consumption tax, thereby avoiding creating policy risks for enterprises.

Mr. Nguyen Van Viet, Chairman of the Vietnam Beer-Alcohol-Beverage Association, proposed not to add sugary soft drinks or non-alcoholic soft drinks to the list of subjects subject to special consumption tax because the policy objectives, appropriateness, effectiveness and fairness of expanding the tax base have not been proven. Applying special consumption tax on sugary soft drinks will cause the revenue of the soft drink industry to lose about VND 3,664 billion, while the additional tax revenue for the state budget will only reach VND 1,525.9 billion. In addition, this will also affect 9,000 small and medium enterprises and 1 million product trading households; affecting tens of thousands of workers in the value chain of enterprises and is expected to negatively impact the livelihoods of 337,000 sugarcane growing households.

Mr. Nguyen Thanh Phuc, Director of External Relations of Heineken Vietnam, commented: "Barley drinks and non-alcoholic soft drinks should not be subject to special consumption tax. The proposal from the Ministry of Finance states that barley drinks are similar to beer because they have the same ingredients, process, form, and taste as beer, so they need to be subject to special consumption tax. We think that this proposal is very unreasonable, because these similar factors are not a legal basis for imposing special consumption tax, nor is it a basis consistent with the purpose of special consumption tax, which is to limit or discourage the consumption of products that are harmful to health (specifically, alcoholic products). In fact, barley drinks are a non-alcoholic product and there has not been any scientific research concluding that barley drinks are harmful to health. At the same time, barley drinks have a similar taste to beer, which can contribute to changing consumer behavior from beer and alcoholic products. to non-alcoholic products; contributing to reducing the harmful effects of alcohol abuse".

NGUYEN ANH VIET