Opposition to Vietnam's proposed soft drinks tax increases, even among officials

By Lester Wan contact

- Last updated on GMT

The proposed tax will be in addition to the government’s planned 12% VAT, encompassing all sweetened beverages. ©GettyImages
The proposed tax will be in addition to the government’s planned 12% VAT, encompassing all sweetened beverages. ©GettyImages

Related tags: Tax, Coffee, Vietnam

Opposition is gathering pace against proposals from Vietnam’s Ministry of Finance to combat obesity by imposing a 10% tax on sugary drinks from 2019.

The World Health Organization (WHO) had hailed the proposed tax, which it said is already in place in 40 countries, while the country’s finance chiefs said “the tax will help regulate the consumption of sweetened beverages.”

This special consumption tax will be in addition to the Vietnam government’s planned 12% value-added tax (VAT), and it will encompass all sweetened beverages including carbonated and non-carbonated soft drinks, energy drinks, tea and coffee. Only dairy products will be excluded.

The new sweet drinks tax is expected to generate nearly đ5 trillion (about US$220m) in revenue for the Vietnamese state, but the proposal is seeing growing opposition, even from fellow government departments.

The country’s Ministry of Industry and Trade has released a statement saying that the reason given that soft drinks contain sugar is insufficient for a special consumption tax, and that the Ministry of Finance needed to give clearer explanation on why their consumption should be restricted and why they should be subject to higher taxation.

This echoed the sentiment of the Vietnam Chamber of Commerce and Industry (VCCI) — representing thousands of Vietnamese businesses — that a special tax should only be imposed after there have been adequate studies done on the drinks’ impacts to consumer health, as well as how such a regulatory measure could help.

Discrimination fears

Likewise, Viet Nam News​ also reported that Herbert Cochran, director of the Vietnam Trade Facilitation Alliance said that the special consumption tax would only will create discrimination in the food and beverage industry.

“Studies indicate that various factors, such as unhealthy diets and inactive lifestyles, contribute to health problems, including diabetes and obesity. Taxing sweet beverage may not help reduce or prevent the problems,"​ he was quoted as saying.

Meanwhile, the Ministry of Agriculture and Rural Development have also asked the Ministry of Finance to reconsider the proposal and its impact, especially on the inclusion of tea and coffee.

Even the Ministry of Planning and Investment has been reported to also be against the tax, which it said would affect the beverage industry as well as its significant labour force.

While lauding the proposed tax, Dr Kindong Park, WHO representative in Vietnam, had commented: “The (Vietnam) government should implement proactively comprehensive measures to curb the threat of obesity and non-communicable diseases. Tax policy is just one of a range of cost-effective measures".

In September, we reported that beverage firms in Vietnam had spoken out​ against the sweet drinks tax.

 

 

 

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