The current method of calculating special consumption tax based on the relative method still has many shortcomings. Resolution 115/NQ-CP of the thematic meeting on law making in July 2023 has set out the direction for developing a mixed tax calculation method for alcohol and beer, on the basis of ensuring the special consumption tax target, contributing to the orientation of production and limiting the use of products that are not beneficial to health.
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Vietnam is applying a relative method of calculating special consumption tax on beer and wine products. That is, applying a percentage of tax based on the selling price. This unintentionally equates the quality of the product inside. Beer products with lower alcohol content, less harmful to health, are sometimes taxed at the same or higher levels than products with higher alcohol content, but are sold by manufacturers at a cheaper price to attract consumers.
According to experts, the current relative tax calculation method does not encourage consumers to choose low-alcohol, good-quality products. Statistics for the period 2018 - 2021 show that beer consumption in Vietnam has not decreased but tends to shift from high-priced products to lower-priced products.
Many countries in the world have switched to applying excise tax according to the absolute method, that is, taxing based on the alcohol concentration of beer and wine. The higher the alcohol concentration of beer and wine, the higher the tax will be. This is a fairly fair and transparent mechanism, both increasing competitiveness and helping to regulate the behavior of abusing beer and wine.
However, switching to this tax calculation method can take a long time and requires a specific roadmap.
According to Associate Professor Dr. Nguyen Thuong Lang, Hanoi National Economics University, both relative and absolute tax calculation methods have their own advantages and disadvantages. Therefore, the world is shifting to applying mixed tax calculation methods, which means combining both relative and absolute taxes on beer and wine products.
The mixed tax regime has been widely applied in many countries such as Singapore, Philippines, Thailand, Korea, Japan...
Dr. Nguyen Quoc Viet, Deputy Director of the Vietnam Institute for Economic and Policy Research (VEPR), University of Economics, Vietnam National University, Hanoi, also said that ideally, the State should adjust the special consumption tax policy on beer and alcohol, using a mixed method.
This is a trend that is happening worldwide and has been proven to be more effective in managing beer and wine products. This method can both regulate consumption, reduce the negative impact of alcoholic beverages on human health, and contribute to society and the economy.
The mixed tax system has clear advantages in achieving the government's goal of reducing the harms of alcohol consumption, while still ensuring sustainable budget revenues and encouraging the development of the beer industry.
Under the mixed tax structure, the absolute tax is levied on the volume of consumption (cans/liter). Therefore, manufacturers have an incentive to invest costs (e.g. using higher value input materials, investing in more modern production lines...) to create high-quality, even low-alcohol and less harmful products.
With more choices of better quality products, consumers will tend to self-regulate their consumption of poor quality products that are more harmful to health. With lower prices for low-alcohol products, more innovation will be encouraged and consumption of pure alcohol may decrease.
Regarding the impact on the budget, in the long term, budget revenue is increased sustainably in terms of total revenue from direct taxes (taxes on income) and indirect taxes.
PV
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