Pursuant to Plan 81/KH-UBTVQH15 of the National Assembly Standing Committee, the Law on Special Consumption Tax is being amended to address emerging problems while encouraging the use of environmentally friendly products and limiting the consumption of goods harmful to health.
In Resolution No. 115/NQ-CP, the Government requested the Ministry of Finance to develop a mixed tax calculation method (tax rate based on percentage and absolute tax rate) for alcohol and beer. Develop solutions to adjust and increase the special consumption tax rate on alcohol, beer and tobacco at appropriate tax rates, according to a roadmap on the basis of ensuring the special consumption tax target contributes to orienting production and limiting the use of products that are not beneficial to health.
Special consumption tax policy continues to be revised. Photo: VTV.
The basis for calculating tax is a matter of discussion. Choosing a method of calculating tax to promote the role of this tax, while achieving the goal of ensuring the health of the people and the community, increasing state budget revenue and creating conditions for businesses to recover and develop better.
Contributing to the drafting of the Law on Special Consumption Tax (amended), some economic experts said that applying the relative tax method is no longer suitable. However, the absolute tax method is not feasible in the current conditions of Vietnam and causes difficulties for domestic enterprises.
Proposing the option of mixed tax, Associate Professor, Dr. Dinh Trong Thinh (Academy of Finance) said that the mixed tax model, which is a combination of relative tax and absolute tax, is increasingly being applied by many countries.
“It is not by chance that developed countries apply the mixed tax model,” shared Dr. Dang Thi Thu Hoai (Central Institute for Economic Management). According to Ms. Hoai, “It is time for Vietnam to apply a mixed tax on alcoholic beverages instead of the current relative tax.”
Ms. Dang Ngoc Huong, (European Chamber of Commerce in Vietnam - Eurocham) said that in the past, the tax method was relatively suitable for Vietnam, because the advantage was automatic adjustment according to inflation, minimizing frequent tax adjustments. It was also convenient for tax collection and management.
However, according to Ms. Huong, relative tax does not bring the desired effect. To ensure the health of consumers, absolute tax is the best, but under the conditions of Vietnam, it should not be applied because it can cause difficulties for domestic enterprises.
“We need a shift, which is the mixed tax model, and this model is feasible in the current conditions of Vietnam,” he proposed. The Philippines, when switching to a mixed tax, has solved the problem of fairness between domestic products and imported products.
According to Ms. Hoai, CIEM has conducted some studies on the effectiveness of mixed taxes and found that applying the mixed tax method will make the price of high-end wine products relatively cheaper than if a relative tax is applied. Thus, consumers will switch to using better quality products, limiting the use of cheap products of unknown origin. Mixed taxes will help increase budget revenue by about 25% compared to a relative tax.
“The trend of applying mixed taxes to alcoholic beverages is clear, because this is an advanced method in the world,” said Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consulting Association.
Decision No. 508/QD-TTg approving the Strategy for Tax System Reform to 20230 requires research on the application of a combination of proportional tax rates and absolute tax rates for a number of goods and services subject to special consumption tax.
Resolution No. 115 of the Government has oriented this issue. However, the application of mixed tax must have a specific and public roadmap so that businesses can be best prepared.
Experts believe that amending the Law on Special Consumption Tax is necessary to further promote the role of this tax in accordance with the Party and State's policies and orientations on perfecting the special consumption tax policy to regulate consumption in line with consumption trends in society towards protecting people's health and the environment, ensuring reasonable mobilization of resources for the state budget and in line with international tax reform trends. The amendment of the Law needs to ensure overcoming obstacles and shortcomings in the practical implementation of the Law.
“The Law on Special Consumption Tax not only contributes to budget revenue but is also an effective policy tool to guide production and consumption in society,” said Ms. Nguyen Thi Phuong Mai, Vice Chairwoman of the National Assembly's Law Committee.
According to experts, with this amendment, the Law on Special Consumption Tax will further promote its role in life, economy and society; ensure a stable and favorable business environment, harmonize the interests of the State, people and businesses as well as be consistent with international practices.
The Law on Special Consumption Tax (amended), when issued, will strongly impact consumer behavior as well as business operations and the state budget.
Ha Linh
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