A Comprehensive Impact Assessment Needed for the Proposed Special Consumption Tax on Sweetened Beverages and Alcoholic Drinks

A notable point in the draft law is the proposal to impose a special consumption tax on beverages with a sugar content above 5g/100ml, in alignment with the standards set by the Vietnam Standards (TCVN). This move is intended to support the directives of the Party and the State in protecting public health, as well as the recommendations of the World Health Organization (WHO), the United Nations Children’s Fund (UNICEF), and the Ministry of Health.

Regarding this matter, the reviewing agency shared that the majority of the Standing Committee of the Finance and Budget Committee agreed with the inclusion of these products in the taxable category to help steer production and consumption and expand the tax base. However, some opinions suggested considering the exclusion of sugary drinks from the special consumption tax base, citing that Vietnam’s consumption of such drinks is not high, and only a small number of countries currently levy special consumption taxes on them. Additionally, they argued that sugary drinks are not the sole or primary cause of obesity, and employing other solutions may prove more effective in curbing this issue.

Expressing her viewpoint, Le Thi Nga, Chairman of the National Assembly’s Judicial Committee, emphasized the necessity of referring to international experiences and understanding how many countries impose special consumption taxes on such products. She also advised the drafting agency to conduct a comprehensive impact assessment to prevent any adverse effects on production and consumption. Nguyen Thanh Hai, Head of the Delegation of Deputies, shared a similar sentiment, suggesting a more detailed impact assessment as there are numerous sugary food products available. She asserted the need to demonstrate the impact of sugary drinks on health and the potential consequences of restricting their consumption.

National Assembly Chairman Tran Thanh Man agreed that this is an important draft law that requires a thorough and careful impact assessment to ensure that any amendments are practical and meet the needs of the current situation. Regarding sugary drinks, he requested further clarification on international experiences, the fairness of taxation among sugary products, and the rationale for using taxation as a means to discourage the consumption of these drinks. He also suggested considering a reasonable tax roadmap for the subjects covered in the draft law.

Concerning the proposed increase in special consumption tax on alcohol and beer, as reported by NLD on September 27, Mr. Nguyen Van Viet, Chairman of the Vietnam Beer, Alcohol, and Beverage Association, stated that businesses in the alcohol and beer industry respect the government’s directives.

However, Mr. Viet noted that this matter warrants careful consideration. The beverage industry is facing significant challenges due to the prolonged impact of the COVID-19 pandemic and the disruptions caused by geopolitical conflicts worldwide, which have affected supply chains. Additionally, the impact of Decree 100 on administrative sanctions in the field of road traffic and the recent passage of the Road Traffic Safety and Order Law, which imposes a complete ban on blood alcohol content for drivers, have further compounded the difficulties faced by alcohol and beer businesses.

In 2023, production by enterprises in the alcohol and beer industry plummeted to record lows. This downward trend persisted in 2024, with data from the General Statistics Office indicating a 4% year-on-year decline in revenue for the industry during the first eight months of the year.