What level of tax increase is important to ensure the existence and nurture revenue sources, thereby strengthening business confidence of enterprises, especially FDI enterprises and new investors?
Amending the Law on Special Consumption Tax: The important thing is to nurture revenue sources.
What level of tax increase is important to ensure the existence and nurture revenue sources, thereby strengthening business confidence of enterprises, especially FDI enterprises and new investors?
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| Experts attended the seminar on Vietnam's third quarter economic information, and the socio-economic impact of special consumption tax policy on industries. |
This is the opinion expressed by experts at the Workshop: "Economic information for the third quarter and the socio-economic impact of special consumption tax policy on industries" organized by the European Chamber of Commerce in Vietnam (Eurocham) on November 18 in Hanoi.
As planned, the Draft Law on Special Consumption Tax (amended) will be discussed and commented on at the ongoing 8th Session of the 15th National Assembly. This is one of 13 draft laws officially commented on during this session.
Dr. Nguyen Minh Thao, Head of the Business Environment and Competitiveness Department, Central Institute for Economic Management (CIEM) analyzed: "Tax policy aims to ensure revenue, but the main goal of special consumption tax is to regulate consumer behavior, then to regulate the behavior of producers". However, the Draft Law on Special Consumption Tax (amended) is putting the goal of increasing revenue first.
The Business Confidence Index (BCI) has declined since the pandemic and even dropped sharply, below the average (below 50 percentage points). Three years after the pandemic, this index has not really returned to the previous expectations.Mr. Nguyen Hai Minh, Vice Chairman of EuroCham
To clarify further, Ms. Thao analyzed: “Increasing taxes causes beer prices to increase, production to decrease in sales and profits, thereby causing 21 other related industries to decrease as well (agriculture, packaging, transportation, services, hotels and restaurants, etc.).
Domestic consumption, one of the important growth drivers of the economy, is still facing low purchasing power and has not yet recovered to pre-pandemic levels. Beverage manufacturing industries are also facing a sharp decline in revenue.
"It must be regulated appropriately, and cannot create additional burdens for businesses. Therefore, increasing taxes at what level to ensure the existence and nurture revenue sources, thereby strengthening business confidence of businesses, especially FDI enterprises and new investors, is important," Ms. Thao analyzed.
Ms. Dinh Thi Quynh Van, Chairman of PwC Vietnam, agrees with the trend of increasing taxes on the beer industry, but also recommends considering the tax increase level to harmonize the interests of businesses, the industry, and the budget revenue.
"Above all, to have a long-term source of revenue, manufacturing enterprises must invest in profitable business, expand production and increase revenue. Increasing taxes does not always increase revenue and reducing taxes does not always reduce revenue," Ms. Van emphasized.
Mr. Nguyen Thanh Phuc, Director of External Relations of Heineken Vietnam, said that the tax increase needs to ensure the principle of maintaining stability, harmony, nurturing revenue sources and being consistent with economic scenarios, while at the same time, aiming to build a predictable investment environment and public policies to strengthen the confidence of foreign investors.
In the context of domestic consumption not yet recovering to pre-pandemic levels, if taxes are increased, the beer industry will be in great difficulty, increasing taxes will have a wide and strong impact on the beer industry and 21 related industries. Increasing taxes will force FDI enterprises such as Heineken to recalculate investment, the possibility of narrowing production, affecting the income and employment of workers in the industry's production chain.
"Extending the tax increase roadmap is most necessary for businesses, and is a way to support businesses that are still on the path to recovery after the recent long difficult period," Mr. Phuc emphasized.
Therefore, Heineken, businesses and the Vietnam Beer - Alcohol - Beverage Association (BVA) proposed: "To create a stable environment for the recovery of industries, the beer industry recommends keeping the special consumption tax rate unchanged for 1 year from 2026 when the amended law takes effect, meaning the first tax increase will be in 2027".
Then, to help consumers gradually adapt to the new price due to the increase in special consumption tax, beer businesses proposed to increase the tax once every 2 years and each time increase by 5%, by 2031 increase to a maximum of 80% and maintain stability.
Source: https://baodautu.vn/sua-luat-thue-tieu-thu-dac-biet-quan-trong-la-nuoi-duong-duoc-nguon-thu-d230333.html
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