Mr. Dau Anh Tuan, Deputy General Secretary of VCCI: "Businesses are not convinced by the proposal to increase special consumption tax of the Ministry of Finance" - Photo: B.NGOC
Business "difficult on top of difficult"
Many experts and business representatives expressed concerns at the Consultation Workshop to finalize the draft Law on Special Consumption Tax , organized by the Vietnam Federation of Commerce and Industry (VCCI) on March 18 in Hanoi.
Previously, the draft law sent by the Ministry of Finance to collect opinions from ministries, branches, businesses, and associations proposed two options for increasing special consumption tax in the 2026-2030 period, accordingly, the special consumption tax rate on beer and alcohol was proposed to increase from the current threshold of 65% to 100% in 2030.
Speaking at the workshop, Dr. Can Van Luc - BIDV chief economist - said that increasing special consumption tax on beverages helps increase budget revenue in the short term, but in the medium and long term it reduces consumer demand and narrows the scale and value of production.
Reduce the added value of the economy, reduce business revenue and profits, thereby reducing VAT and corporate income tax.
"The faster and higher the tax increase , the greater the reduction in benefits for the industry, reducing total consumer demand and domestic investment. These are two factors that contribute more than 90% to GDP growth in 2024," said Mr. Luc.
Increasing the special consumption tax on alcoholic beverages too high will affect the long-term budget contribution efficiency, businesses will face "difficulties on top of difficulties" and the income of workers in the industry and related industries such as packaging, transportation, tourism, and catering will decrease.
Therefore, it is necessary to calculate the tax rate, timing and roadmap for tax increase appropriately and feasiblely, avoiding the situation of increasing too quickly or too high, causing shock to businesses, leading to adverse effects such as circumventing the law, switching to using other things that are more harmful, Mr. Luc emphasized.
According to Dr. Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy Research, increasing special consumption tax at this time is contrary to the Government's policy of stimulating and supporting businesses after the pandemic. It is necessary to maintain the support and stimulus policy until the end of this year.
Regarding the pressure to increase taxes to increase budget revenue, Mr. Thanh analyzed: "The first two months of the year have completed collecting 1/4 of the annual budget, so the argument of increasing taxes to increase revenue is not convincing.
This is the time to conduct more careful research before issuing a new policy on special consumption tax, focusing on the effectiveness and efficiency of the policy.
A business representative gives comments at the workshop - Photo: B.NGOC
Proposal to delay tax increase to 2028
Regarding the two options for increasing special consumption tax on the beverage industry, Mr. Nguyen Van Viet, Chairman of the Vietnam Beer - Alcohol - Beverage Association, recommended that the tax increase on alcohol and beer should be postponed to 2028, and the increase roadmap should follow option 1 to support business development.
As for the beverage industry, sugary soft drinks should not be added to the list of products subject to special consumption tax.
The reason given by Mr. Viet is that increasing the special consumption tax too high and too quickly not only affects the beer, alcohol and beverage production industry but also many other industries, about 300,000 workers working directly in this industry are negatively affected and 1,000,000 indirect workers in other industries are also affected.
Sharing this view, Mr. Nguyen Hoang Giang, General Director of Saigon Beer Trading Company Limited, also proposed to increase the special consumption tax on beer and alcohol according to option 1 that the Government previously submitted to the National Assembly and extend the law's effectiveness to 2028, instead of the current proposal of 2026.
A study conducted by the Institute for Industry and Trade Policy and Strategy, the Vietnam Beverage Research Institute and the Central Institute for Economic Management shows that increasing the special consumption tax on the beverage industry according to option 2 will reduce the GDP growth rate in each year, the reduction is equivalent to about 0.08% in the period from 2026 to 2030.
It is worth noting that increasing the special consumption tax too high will lead to consumers switching from consuming mainstream beer brands to unofficial beer lines, creating conditions for grass-roots beers to develop more strongly, not only not collecting tax but also affecting consumers' health.
According to Ms. Tran Ngoc Anh - Senior Foreign Affairs Director of Heineken Vietnam Company, the special consumption tax policy is an effective tool to maintain the growth momentum of purchasing power, but both current tax increase options do not have a specific assessment, quantifying the policy impact on economic growth and changes in consumer behavior.
Therefore, Ms. Anh recommended that the law drafting agency should comprehensively assess the impact, with the participation of independent research organizations to ensure a scientific basis for tax policy, organize full consultation with affected subjects, and consider economic development factors to avoid disruption to the beer industry and related industries.
Regarding the tax increase roadmap, it is necessary to consider it at a reasonable level to reduce negative impacts on businesses and consumers, thereby maintaining economic growth momentum.
Mr. Nguyen Chi Nhan, General Secretary of Vietnam Tobacco Association:
If not careful, many domestic tobacco businesses are at risk of closing down and going bankrupt because of the proposed plans to increase special consumption tax, which is too high compared to the present and unprecedented.
Two options for increasing special consumption tax on alcohol, beer, and tobacco are being proposed:
| Option 1 | Alcohol over 20 degrees | Alcohol under 20 degrees | Beer | Tobacco increase |
|---|---|---|---|---|
| Year 2026 | 70% | 40% | 70% | 2,000 VND/bag |
| Year 2027 | 75% | 45% | 75% | 4,000 VND/bag |
| Year 2028 | 80% | 50% | 80% | 6,000 VND/bag |
| Year 2029 | 85% | 55% | 85% | 8,000 VND/bag |
| 2030 | 90% | 60% | 90% | 10,000 VND/bag |
| Option 2 | Alcohol over 20 degrees | Alcohol under 20 degrees | Beer | Tobacco increase |
|---|---|---|---|---|
| Year 2026 | 80% | 50% | 80% | 5,000 VND/bag |
| Year 2027 | 85% | 55% | 85% | 6,000 VND/bag |
| Year 2028 | 90% | 60% | 90% | 7,000 VND/bag |
| Year 2029 | 95% | 65% | 95% | 8,000 VND/bag |
| 2030 | 100% | 70% | 100% | 10,000 VND/bag |
Source: https://archive.vietnam.vn/tang-thue-tieu-thu-dac-biet-voi-ruou-bia-doanh-nghiep-chua-tam-phuc-khau-phuc/
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