Beverage, game businesses threatened by proposed consumption tax

By Duc Minh   July 7, 2023 | 12:00 am PT
Beverage, game businesses threatened by proposed consumption tax
Several glasses with colorful sweetened drinks inside them. Illustration photo by Freepik
A proposed special consumption tax on sweetened drinks and video game products could hurt both industries and reduce companies’ competitiveness, business representatives say.

Nguyen Van Viet, chairman of the Vietnam Association of Beer, Wine and Beverages, told a forum Wednesday that the proposed tax on sweetened drinks is unfair as sugary beverages are not the main cause of obesity in Vietnam.

He was referring to a recent proposal by the Ministry of Finance to impose a special consumption tax on sweetened drinks. The ministry had suggested a similar 10-20% tax on sugary drinks in 2019, but the proposal was not approved.

Viet said that sugary drinks contains about 44 kcal per 100 grams on average, which he argued is the lowest figure among processed sugary foods. Cookies, for example, contain 300-400 kcal per 100 grams, while ice-cream has an average 200 kcal.

The tax, if imposed, could divert consumers to other products with even higher sugar contents, he said.

Some countries have imposed this policy but the impact on reducing obesity has low, and Vietnam’s consumption of sugary drinks is also relatively low compared to the world, Viet argued.

The association chairman also said that the tax will have an impact on 9,000 small and medium businesses in the industry, one million sellers, tens of thousands of workers and hundreds of thousands of sugarcane farmers.

This is especially difficult for businesses that are still trying to recover post-pandemic, he added.

A 2021 report by the Central Institute for Economic Management showed that a 10% tax on sweetened drinks could reduce industry revenues by VND3.8 trillion while only increasing state budget revenues by VND2.72 trillion.

Video game businesses have also voiced concerns about the proposed tax.

La Xuan Thang, a representative from online game producer VNG, said that if the tax is imposed many companies may resort to "smuggling" their games onto the market, and managing such side effects would be difficult.

The tax will also bring about more challenges to Vietnam’s game industry, which has never received any incentive policy and is facing intense competition from foreign businesses, he said.

This is why only 15% of the country’s registered game companies are still active. The rest of them have either shut down or moved overseas to enjoy incentive policies there, Thang added.

There are two sides to everything, and games help people be creative, adopt the most advanced technology and to reduce stress, he said, adding that the e-sports category has been approved as a sport by the International Olympic Committee.

Nguyen Trong Nghia, a representative of game producers in Vietnam, said that no country in the world has imposed a special consumption tax on video games, even though some have policies to limit playtime or control content, including South Korea and China.

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