The general principle when building tax policies is to analyze from many angles, balancing the overall interests of many parties. Therefore, increasing special consumption tax on alcohol and beer needs to be carefully studied, as well as having a reasonable increase roadmap to help businesses and consumers adapt to the gradual tax increase until 2030.
That was the sharing of Mr. Nguyen Van Phung - former Director of the Large Enterprise Tax Department (General Department of Taxation) when talking with Kinh te & Do thi reporters about the story of increasing special consumption tax on beer and alcohol being proposed by the Ministry of Finance.
Ensuring harmony of interests of all parties
According to the Draft Law on Special Consumption Tax (SCT) that is being consulted by the Ministry of Finance, the proposed tax increase for alcohol and beer is quite high. Will this new tax rate shock businesses, sir?
- I am carefully studying the Draft Law on Special Consumption Tax submitted by the Ministry of Finance to the Government. This proposal has many new points compared to the previous Draft. In particular, there are 2 options for increasing tax on alcoholic beverages. The options proposed are all quite high compared to the current tax rate applied to this item. Accordingly, by 2030, the special consumption tax rate on beer and wine above 20 degrees will increase to 90 - 100%, and below 20 degrees will be at 60 - 70%.
I think that with the goal of improving taxes according to the program set out until 2030 approved by the Government on increasing taxes, including special consumption tax to have resources for budget spending, ensuring national defense, security, social security and adjusting personal income tax rates is necessary.
Because, tax in general and special consumption tax in particular, its main task is to create revenue for the State budget. At the same time, tax collection will impact changes in production, consumption and income behavior. Along with that, it will have an effect on the supply-demand relationship and social relationships.
However, tax is not a panacea, the main goal is still to create revenue sources for the State budget. Adjusting taxes is also part of the State's systematic strategy, especially in the current context, we must actively fight corruption. Therefore, tax policy must be more impartial, more effective, and more carefully researched.
Regarding the two proposed options, the businesses have their reasons for speaking up. Sudden adjustments also make it difficult for businesses to adapt. Therefore, it is necessary to research and collect opinions extensively and carefully.
Increasing taxes is good, but on the contrary, we must ask the question, if we increase taxes right now, will it ensure business development? We cannot confirm this for sure, but need to do more research based on scientific research and comprehensive economic models before we can recommend to the National Assembly whether to apply option 1 or option 2.
The sudden tax increase will cause many businesses to face difficulties. Do you think we should delay the tax increase?
- At this point, I cannot answer whether it can be postponed or not. However, agencies need to consider the roadmap for increasing special consumption tax, avoiding risks from policy "shocks" that negatively affect businesses. Because special consumption tax has a huge impact on the socio-economy, causing the risk of reducing budget revenue from value added tax and corporate income tax. The risk of spillover effects on businesses in the supply chain and significantly affecting small and medium enterprises.
Both options must be carefully studied, based on scientific data. We have only asked for the National Assembly's opinions since October this year, and we will only get them approved in May next year. So we still have time to study them carefully, especially the two options that have been proposed.
We need to calmly listen from many sides and ask experts to give their opinions carefully. We cannot give opinions emotionally. Therefore, at this time, I cannot answer the question of whether the tax increase can be postponed or not.
Tax tools are not a silver bullet
According to the proposal of the Ministry of Finance, the current method of calculating relative tax will be maintained, but there are also opinions that it is necessary to apply the method of calculating absolute and mixed tax as in many countries around the world. So what is your opinion on this issue?
- From a comprehensive perspective, from the perspective of the people as well as researchers, I see that this Draft has some progress compared to before. First of all, it must be affirmed that the Draft has absorbed public opinion, and has not immediately applied mixed methods or absolute methods.
In fact, relative, absolute or mixed tax calculation methods all have certain advantages and disadvantages, requiring State management agencies to carefully study the necessary and sufficient conditions, clearly analyze and evaluate the problem of benefits and costs... on that basis, propose to apply the most appropriate tax calculation method in each stage of development.
Which method of tax calculation is the choice of each country, so that it is suitable for the socio-economic conditions of the country.
In Vietnam, if we immediately apply the absolute method or the mixed method, it will cause shock and damage to businesses and consumers. Because most of us have average income, not enough finance to consume the price segment of million VND for a bottle of wine, hundred thousand VND for a bottle of beer.
We can only consume products at a moderate level. For example, 15,000 - 20,000 VND for a can of beer, a bottle of wine costs about 100,000 VND is reasonable. So the tax rate is reasonable, I highly appreciate the drafting committee's acceptance.
The Vietnamese beer and wine market has a large gap between the prices of popular products and high-priced products. If an absolute tax rate is applied to the number of liters of products, the prices of high-end products will be more profitable, while the prices of popular products (where Vietnamese enterprises account for the majority) will be pushed up. Therefore, it will affect the production and competitiveness of Vietnamese beer brand enterprises.
What do you think about the goal of increasing taxes on alcohol and beer? And if tax policies are not used, what policies do you think should be used to limit the use of these products?
- When adjusting the increase in special consumption tax on alcoholic beverages, policy makers aim for three goals: regulating consumption, reducing the negative impact of alcoholic beverages on human health; ensuring stable and sustainable state budget revenue; and protecting the domestic beverage manufacturing industry.
In particular, the goal of increasing taxes sharply to change behavior immediately, I consider this a good idea. However, I am also very concerned when hearing the opinions of many experts that the impact assessment is not comprehensive. The impact assessment numbers are only relative, contrary to the impact assessment of the research conducted by the Central Institute for Economic Management.
If using accounting figures for statistics, in 2003 - 2005, the consumption per capita was 3.8 liters/person/year, in 2015 - 2016 it was 8.3 liters. Meanwhile, the beer tax was previously 45% in the period 2010 - 2012, 50% from 2013, 55% from 2016, 60% from 2017, 65% from 2018 to present and continues to increase.
Taxes have been increasing continuously for the past 10 years, but considering the average consumption per capita which has increased more than 2 times and especially the negative impact of alcohol, the rate of people abusing alcohol and committing violence in 2010 was only 1.4% of the population, but alarmingly, in 2016 this rate increased to 14.4%, 10 times higher. Taxes increase by 5% each year but violent behavior increases 10 times.
And I see that only when Decree No. 100 of 2019 is implemented strongly by the Government will this violent behavior change. Therefore, it can be affirmed that tax is not a "universal key", the effectiveness of administrative measures is stronger than the impact of tax.
In my opinion, in the relationship of ensuring reasonable budget revenue in the context of restructuring tax revenue sources, we must adjust taxes, including special consumption tax.
In addition, there should be communication campaigns to make consumers accept the price, influence manufacturers to improve technological processes, innovate formulas, and reduce toxic substances. Enterprises today are too concerned with promotion but do not improve products and production processes.
Thank you!
Source: https://kinhtedothi.vn/phuong-an-tang-thue-ruou-bia-can-duoc-tinh-toan-nhieu-chieu.html
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