A man buys a sugary drink. A potential increase in taxes aimed at sugary beverages has aroused mixed responses. (Photo: vnbusiness.vn)
Dau Anh Tuan, Deputy General Secretary of the Vietnam Chamber ofCommerce and Industry (VCCI)’s, said that the Ministry of Finance sent a reportto the Government about the proposal of amending law on special consumptiontax.
The highlight of the proposal was expanding the base for specialconsumption tax which aims to levy excise taxes on products and servicesincluding sugary soft drinks, barley beverages, non-alcoholic soft drinks, newtobacco products and online games. In addition, the increases in excise taxeson tobacco and alcohol would be put into consideration.
Tuan said that mixed opinions were arising around the proposals,especially the imposition on sugary beverages, which the Ministry of Financesaid aimed to protect the health of the people and prevent obesity.
According to Nguyen Minh Thao, head of the Business Environmentand Competitiveness Research Department under the Central Institute forEconomic Management, it is necessary to study the impacts of the imposition ofa special consumption tax on sugary beverages.
Thao questioned whether the targets of the policy, includingpublic health and budget revenue, could be achieved, especiallygiven businesses are in a lot of difficulty.
There were about 1,800 production establishments in the beverageindustry which provide some 300,000 jobs.
Thao said that the imposition of a special consumption tax on thebeverage industry could bring negative impacts, such as higher prices and lowerconsumer demand, which would result in a lower contribution to the budget.
She said that the imposition of a 10% special consumption tax rateon sugary drinks would cause drops in output, GDP, income of workers as well asbudget. It was estimated that the 10% excise tax rate on sugary drinks wouldbring an additional revenue of nearly 2.28 trillion VND but cause a decrease of3.16 trillion VND for the beverage and sugar industries, meaning a drop of 880.4billion VND in total.
The impacts would also spread to thousands of workers in the valuechains of the industry and around 9,000 small- and medium-sized enterprises and1 million business households.
Nguyen Van Viet, Chairman of the Alcohol–Beer–BeverageAssociation (VBA), said that inappropriate tax reforms would significantlyaffect the recovery of enterprises and growth targets, especially in thecontext of economic difficulty.
Vu Tu Thanh, Deputy Director of the US–ASEAN Business Council,said that there were 45 countries around the world that levied specialconsumption tax on sugary drinks. However, experiences in some countries showedthat the policies were not as effective as expected in preventing obesity.
For example, in Chile, the obesity rates in men and women were19.2% and 30.7%, respectively, in the 2009-2010 period. After the imposition ofa special consumption tax on soft drinks in 2014, the obesity rates increasedto 30.3% and 38.4%, respectively in the 2016-2017 period.
According to Nguyen Thi Lam, former Deputy Director of theNational Institute of Nutrition, there were a number of causes of obesity suchas unhealthy nutrition and lack of exercise.
Soft drinks were not the only supply of calories in foods, shesaid, adding that the imposition of an excise tax on sugary drinks might not beable to solve the problem of weight gain and obesity.
She cited a study that sugary drinks only accounted for an averageof 1.1% of the total calories from food and beverages.
The ASEAN Food Security and Nutrition report in 2021 found thatsugary foods and sweets in general only provide about 3.6% of the total energyintake from food and beverages while the most energy sources were cereals (51.4%),meat (15.5%), other foods (11.5%), including vegetables and fruits (6.9%).
The levy of excise tax on sugary beverages would not be able tosolve the problem of weight gain and obesity because many foodscontain sugar and calories on the market, she said.
Tran Ngoc Trung, head of the legal department of the AmericanChamber of Commerce in Hanoi, said that sugar was a special commoditywhich enjoys protection policies such as quotas, anti-dumping and subsidypolicies. Thus, the imposition of excise tax on sugary products would goagainst the policy of promoting the development of the sugar industry.
Besides, the target of budget revenue would hardly be achievedwhen the tax imposition would cause a decline in production.
Thai Quynh Mai Dung, a standing member of the National Assembly’s Committeefor Foreign Affairs said it was necessary to amend the Law on SpecialConsumption Tax but when and how to amend it must be put into carefulconsideration, in which the opinions of enterprises are important.
Gamemakers want fairness
Domestic game companies said that the imposition of specialconsumption tax would have negative impacts on this promising digital industry,especially given they claim to be facing with unfair competition in themarket.
Nguyen Trong Nghia, a representative of the Vietnam GameDevelopers and Publishers Alliance, said that with an average growth rate of 9%per year, higher than the regional average, Vietnam was a very lucrative marketin the eyes of foreign enterprises.
This is cited as the reason domestic game developers arefaced with harsh competition from foreign firms. Statistics of Newzooshowed that the total revenue of domestic game companies accounted for just 22%of the total.
The imposition of a special consumption tax on the game industrywould undermine the competitiveness of domestic game developers and make itimpossible for them to compete with foreign rivals who were not subjected tothe tax in the Vietnamese market, Tran Phuong Huy, Director of VTC Intecom,said.
The targets of the policy – adjusting behaviours of gamers andincreasing budget revenue – wouldn't be likely to be achieved, he said.
La Xuan Thang from VNGGames said that the special consumption taxwould kill domestic developers and the market shares would fall into smuggledproducts which would make it more difficult to manage.
Thang said that the gaming industry wants to be treated as fairlyas the rest of the entertainment industry.
Experts also said that it was necessary to have an appropriateroadmap for adjusting the tax rates on tobacco./.
VNA
