The Ministry of Finance is proposing to levy a special consumption tax of 10 percent on sweet drinks to combat child - and adult - obesity rates. (Photo: dantri.com.v) Hanoi (VNA/VNS) - The Ministry of Finance isproposing to levy a special consumption tax of 10 percent on sweet drinks tocombat child and adult obesity rates, a problem worrying Government and health experts. However, manybusiness people disagree with the proposal.
The special consumption tax proposal on sweet drinks is a part of a ministry proposal to revise five tax laws,including a value-added tax (VAT), special consumption tax, corporate incometax, personal income tax, and natural resources protection tax.
In August last year, the ministry issued aproposal to place excise tax on sweetened beverages. This time, the authorityannounced that the excise tax rate would be 10 percent - in addition to 12 percentVAT.
This would mean that all sweetenedbeverages, regardless of whether they are soft drinks, tea, coffee or energydrinks, will be subject to the excise tax. However, dairy products will beexcluded.
The ministry’s first proposal three yearsago set the excise tax at 10 percent only on carbonated drinks.
It said the adult obesity rate in Vietnamaffected 25 percent of the population. For children under five years of age,the obesity rate had increased rapidly from 0.6 percent in 2000 to 5.3 percentin 2015, while the rate in HCM City had increased to 10.8 percent - and 12 percentin the downtown area.
This means that the obesity rate in Vietnamis higher than the average rate in the Asian region and developing countries(the current global obesity rate is at 6.9 percent).
Meanwhile, based on information from theWorld Health Organisation (WHO), sweetened beverages are said to have anegative impact on health. To restrict the use of sweetened beverages, 40countries have already imposed special taxes on them.
The ministry said obesity rates amongchildren under five years old were increasing rapidly, putting them at risk ofcardiovascular disease, hypertension, stroke, atherosclerosis, and otherailments.
In Thailand, non-alcoholic carbonated softdrinks are subject to a tax rate of between 20 and 25 percent. Laos imposes 5to 10 percent tax on soft drinks, and Cambodia 10 percent.
While the new tax will create revenue ofnearly 5 trillion VND (220 million USD) for State funds, the proposal has encountered opposition from ministriesand business associations, saying the plan should not include tea and coffeeproducts.
The Ministry of Industry and Trade and theMinistry of Agriculture and Rural Development said tea and coffee, which weresugar-free beverages, were included in the list of sweetened beverages, whilemilk products were excluded, suggesting that the Ministry of Finance carefullyconsider the new proposal and its effects.
Adam Sitkoff, director of the AmericanChamber of Commerce told Vietnam News the imposition of excise taxes onsweetened drinks was uncommon and ill-advised.
He claimed that only four countries in theAsia-Pacific region imposed excise taxes on sweetened beverages.
Herbert Cochran, director of the VietnamTrade Facilitation Alliance, said the imposition of the special consumption taxwould only 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 orprevent the problems," he said.
“Critics may question why other food andbeverage with high sugar are not subject to the tax.”
He said small and medium enterprises would behurt the most and might have to close down, since the price of beverageproducts would rise by about 12 percent, slashing sales.-VNA/VNS
VNA
