Increasing excise tax on sugary soft drinks: Caution needed

DNVN - Sharing with Vietnam Business Magazine, Mr. Nguyen Quoc Viet - Deputy Director of the Vietnam Institute for Economic and Policy Research (VEPR) said that the imposition of a 10% special consumption tax on sugary soft drinks needs to be carefully considered. "Don't be greedy and throw away the tray" because the consumption sector plays an important role in promoting economic development.

The Ministry of Finance is presiding over the drafting of the Law on Special Consumption Tax (SCT) (amended) with adjustments to a number of important contents.

One of the new policy contents added in the draft is “expanding the tax base”, including adding sugary soft drinks to the list of subjects subject to special consumption tax. At the same time, the draft proposes applying a tax rate of 10% because this is a new item.

Recently, many opinions have said that the imposition of 10% special consumption tax on sugary soft drinks has led to negative impacts on the economy as well as the general situation of beverage businesses. Therefore, the process of drafting documents and policies affecting beverage businesses requires more caution and careful consideration.

Sharing with Vietnam Business Magazine, Mr. Nguyen Quoc Viet - Deputy Director of VEPR Institute said that the consumption and service sectors have a great impact on many other sectors. When the special consumption tax is increased on some essential consumer goods, the factory price of that item increases, leading to an increase in product prices when entering the market.

Mr. Nguyen Quoc Viet - Deputy Director of VEPR Institute.

“The price of a can of beverage when it reaches the shelves in different places is different. If the final price increases sharply, it will affect the ability to consume and reduce other consumer services that we are actually hoping to activate,” Mr. Viet said.

The Deputy Director of VEPR analyzed that among the growth drivers, consumption growth has not been as expected, reaching only half of the growth rate before COVID-19. Therefore, looking at the overall trend, Vietnam's growth in 2024 is quite good, but looking at each part and each aspect, especially the retail, household businesses and food services, the sentiment is still somewhat gloomy.

“We must be very careful. Do not increase the special consumption tax for a certain purpose and forget that taxes in the consumer sector play a very important role. If we cannot activate the reduction of the consumption tax, the special consumption tax will decrease, thereby reducing the sustainable budget revenue in the future,” Mr. Viet emphasized.

According to Mr. Viet, it is extremely important that the corporate income tax of domestic private enterprises serving the domestic market after COVID-19 has increased strongly compared to foreign-invested enterprises and state-owned enterprises. The imposition of special consumption tax on a number of products, including sugary soft drinks, will affect the corporate income tax component of the private enterprise sector, including the informal sector, business households and individual businesses.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/tang-thue-tieu-thu-dac-biet-doi-voi-nuoc-giai-khat-co-duong-can-than-trong/20241021093533229