Business
Special consumption tax on soft drinks should be scrutinized: VCCI
An imposition of special consumption tax on soft drinks should be postponed until there is a comprehensive study on obesity status and the effectiveness of this tax on reducing obesity in Vietnam, according to the Vietnam Chamber of Commerce and Industry (VCCI).
The move was made after the Ministry of Finance (MoF) proposed to levy a special consumption tax rate of either 10 percent or 20 percent on soft drinks due from 2019, explaining that the tax is in line with international practice and helps regulate consumption of sugar-containing drinks that can lead to obesity.
Under a proposal sent to MoF, VCCI said that the proposal to impose the tax on soft drinks for health reasons is reasonable, however, there is no further assessment of whether this imposition will reduce or slow down the rate of obesity in Vietnam, which is the most important factor to consider in terms of the effectiveness of this tax policy.
Furthermore, it is also necessary to anticipate some of the negative effects of the imposition – it may impact consumption capacity of households in rural, remote and isolated areas, and enterprises and farmers in certain agricultural sectors.
Dau Anh Tuan, head of VCCI’s Legal Department, said the 10 percent tax rate may not affect urban families, but it will have a significant impact on the spending ability of many families in rural and remote areas. Taxes on soft drinks may not only deprive rural children of this treat, but may also slow the progress of eradicating child malnutrition.
If the research proves that imposition of this tax helps reduce obesity, a special consumption tax should only be imposed on drinks that are high in sugar content, exceeding the permitted limit, VCCI suggested. This measure helps not only to avoid the imposition on products with natural sugar content that the manufacturers cannot separate, but also suits the purpose because drinks with low sugar content do not cause obesity, it said.
Previously, the Vietnam Beer Alcohol Beverage Association (VBA) also requested MoF to withdraw its proposal. According to VBA, MoF’s reason for applying the SCT on soft drinks is to combat obesity, however, it is a conclusion with lack of practical considerations because in reality the major factors causing obesity and diabetes are fast food and food containing a large volume of sugar. Thus, VBA is concerned whether the levy on soft drinks will actually contribute to decreasing obesity and diabetes rates.
Besides, VBA opposes the isolation of soft drinks for the addition of the SCT because there are numerous other food products containing a higher sugar volume than soft drinks, like cakes and candies.
In the development plan for the beer, alcohol, and beverages sector to 2025 with vision to 2035, Vietnam set the target to produce 6.8 billion liters of soft drinks by 2020, which would increase to 9.1 billion liters by the 2020-2025 period and 15.2 billion liters by 2035./.
Under a proposal sent to MoF, VCCI said that the proposal to impose the tax on soft drinks for health reasons is reasonable, however, there is no further assessment of whether this imposition will reduce or slow down the rate of obesity in Vietnam, which is the most important factor to consider in terms of the effectiveness of this tax policy.
The debate over the proposed hefty special consumption tax on soft drinks continues.
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Dau Anh Tuan, head of VCCI’s Legal Department, said the 10 percent tax rate may not affect urban families, but it will have a significant impact on the spending ability of many families in rural and remote areas. Taxes on soft drinks may not only deprive rural children of this treat, but may also slow the progress of eradicating child malnutrition.
If the research proves that imposition of this tax helps reduce obesity, a special consumption tax should only be imposed on drinks that are high in sugar content, exceeding the permitted limit, VCCI suggested. This measure helps not only to avoid the imposition on products with natural sugar content that the manufacturers cannot separate, but also suits the purpose because drinks with low sugar content do not cause obesity, it said.
Previously, the Vietnam Beer Alcohol Beverage Association (VBA) also requested MoF to withdraw its proposal. According to VBA, MoF’s reason for applying the SCT on soft drinks is to combat obesity, however, it is a conclusion with lack of practical considerations because in reality the major factors causing obesity and diabetes are fast food and food containing a large volume of sugar. Thus, VBA is concerned whether the levy on soft drinks will actually contribute to decreasing obesity and diabetes rates.
Besides, VBA opposes the isolation of soft drinks for the addition of the SCT because there are numerous other food products containing a higher sugar volume than soft drinks, like cakes and candies.
In the development plan for the beer, alcohol, and beverages sector to 2025 with vision to 2035, Vietnam set the target to produce 6.8 billion liters of soft drinks by 2020, which would increase to 9.1 billion liters by the 2020-2025 period and 15.2 billion liters by 2035./.
