National Assembly Delegate Cam Thi Man (National Assembly Delegation of Thanh Hoa Province) contributed comments on the draft Law on Special Consumption Tax (amended)

On the afternoon of November 27, at the National Assembly House, continuing the 8th Session Program, under the chairmanship of National Assembly Chairman Tran Thanh Man, the National Assembly discussed in the hall the draft Law on Special Consumption Tax (amended).

Participating in giving comments on the draft Law on Special Consumption Tax (amended), National Assembly Delegate Cam Thi Man (National Assembly Delegation of Thanh Hoa province) gave the following comments:

Regarding the addition of soft drinks according to Vietnamese Standards, with sugar content over 5g/100ml, to the subject of special consumption tax at a tax rate of 10%.

First of all, delegates agreed to add this product to the list of special consumption taxable products to help orient production and consumption, expand the mechanism to encourage beverage manufacturing enterprises and consumers to switch to producing and consuming other sugar-free products, contributing to limiting overweight, obesity and non-communicable diseases. However, in the research report "Assessing the economic impact of the draft special consumption tax on sugary soft drinks" by the Central Institute for Economic Management, it is stated that the beverage industry accounts for 38% of the number of enterprises in the beverage industry, equivalent to more than 2,500 enterprises, with more than 400 beverage manufacturing enterprises and nearly 2,100 wholesale and retail enterprises.

Regarding the impact on budget revenue: Calculation results show that when applying a 10% special consumption tax, the production scale of enterprises will shrink after the tax increase; the added value and production value of the beverage industry will both decrease. In which, the estimated added value will decrease by 0.772%, equivalent to a decrease of 5,650 billion VND. At the same time, the tax imposition will not only affect the beverage industry but also affect 24 other industries in inter-industry relations. The consequences will affect the entire economy, such as the total added value of the economy will decrease by 0.601%; equivalent to 55,077 billion VND. This resulted in a decrease in GDP of 0.448%, equivalent to a decrease of VND 42,570 billion, a decrease in business profits of 0.561%, equivalent to VND 8,773 billion, and therefore a decrease in revenue from corporate income tax of VND 2,152 billion.

These are very thoughtful figures and calculations provided by researchers. Therefore, National Assembly Delegate Cam Thi Man said that it is necessary to balance the goal of guiding consumer behavior to help limit overweight, obesity and non-communicable diseases with the production and business activities of enterprises producing and trading these products. Along with that, she requested the Government to explain more clearly about the ability to achieve the goal of this policy, is it actually to protect people's health or just to increase budget revenue? Therefore, the policy supplement needs to be carefully considered so that the implementation is smooth, businesses have enough time to develop business strategies to ensure timely adaptation to new policies; improve compliance, as well as create momentum for consumers to choose other alternative products or be willing to pay a higher price when consuming this product while still ensuring the achievement of the health protection goal as stated in the Report.

Therefore, National Assembly Deputy Cam Thi Man proposed the following provisions on the implementation roadmap and tax rates in the draft Law: From the effective date of the Law and lasting for 1 year: Tax rate is 5%. 1 year after the effective date of the Law: Tax rate is 7.5%. 2 years after the effective date of the Law: Tax rate is 10% (this is the tax rate that the Government proposes to apply immediately at the time the Law takes effect).

Such a roadmap and tax rate will ensure that the implementation process does not have too great an impact on consumers and businesses; at the same time, businesses will also have time to adjust their product production strategies, shifting to products that are better for consumers' health.

Regarding the authority to add taxable and non-taxable subjects in Clause 3, Article 2 and Clause 5, Article 3, National Assembly Deputy Cam Thi Man proposed to review the content of these two clauses for the following reasons: Article 47 of the 2013 Constitution stipulates: "Everyone has the obligation to pay taxes according to the law". Clause 4, Article 70 of the Constitution stipulates that the National Assembly has the duties and powers to "...; prescribe, amend or abolish taxes". Thus, the authority that the draft Law is expected to assign to the Government belongs to the National Assembly and is the constitutional right of the National Assembly.

In addition, directing on innovation in thinking in law-making, the National Assembly Chairman stated: "Develop and promulgate concise laws and resolutions, stipulating contents within the authority of the National Assembly...; remove from the draft law issues under the authority of the Government, Ministries and other agencies..."

For the above reasons, it is recommended that the Government carefully review and revise the above regulations to ensure appropriateness in terms of authority, compliance with the Constitution and provisions of the Law on promulgation of legal documents as analyzed above.

Quoc Huong

Source: https://baothanhhoa.vn/dbqh-cam-thi-man-doan-dbqh-tinh-thanh-hoa-tham-gia-gop-y-ve-du-an-luat-thue-tieu-thu-dac-biet-sua-doi-231671.htm