World Bank recommends Vietnam to impose 155% alcohol tax

The bank has proposed to the Ministry of Finance that an absolute tax of VND16,500 ($0.65) per liter of alcohol be applied in addition to the existing 65% tax per product, according to a consultancy report.

This ensures that alcohol does not become more widespread, which will bring about positive health impact, the bank added.

It said that the number of alcohol-related death in Vietnam is now 140% higher than the average of lower middle-income country. In 1990 Vietnam’s figure was 59% lower than average.

The increasing rates of mortality and morbidity are driven by the sales and consumption of alcohol, it said.

Data from the World Bank shows alcohol consumption surges 177% between 2008 and 2022.

The rise came despite an increase of beer tax, from 45% to 65%, which shows that the hike was not strong enough to reduce consumption, it said.

The Ministry of Finance, however, said that the high tax that the World Bank recommended is not suitable for Vietnam at the moment.

The ministry instead proposed to gradually increase special consumption tax on wine with 20% or more alcohol content from 65% now to 90% or 100% by 2026-2030.

For wine with less alcohol content the proposed increase is from the current 35% to 60% or 70%.

For beer, it proposed hike from 65% to 90% or 100%.

The state’s coffers will see an increase of VND10.7 trillion annually from special consumption tax on beer, the ministry estimates.

The World Bank, however, commented that the proposed increase is inadequate in lowering alcohol consumption.