Proposed tax on beverages should be based on sugar content: experts

By Phuong Dung   June 21, 2024 | 05:07 am PT
Proposed tax on beverages should be based on sugar content: experts
Experts suggest applying differential rates to sweetened drinks based on their sugar content. Photo by Reuters/Shannon Stapleton
If special consumption tax is levied on sweetened beverages, differential rates should be applied based on their sugar content just like alcoholic drinks, analysts have suggested.

Last week the Ministry of Finance proposed a sweeping 10% excise tax on sugary beverages that contain more than 5 grams of sugar per 100ml to limit their consumption, pointing out that the ratio of overweight and obese children and teenagers (5-19 years) had doubled in 10 years to 19% in 2020, higher than the Southeast Asian average of 17.3%.

That is the sugar threshold applied in many European countries, it explained.

But Nguyen Van Duoc of the HCMC Tax Consultants and Agents Association told VnExpress that there should not be a single rate across the board, but should be based on sugar content in the same manner that alcohol content is considered to tax beer and liquors.

Dr. Nguyen Thuy Duyen of Queen's University Belfast in the U.K. concurred, adding that the rates could be based on other factors like volume or ex-factory price.

The government should consider the options that would least affect the beverage industry while still limiting the consumption of unhealthy products, she said.

Dr. Nguyen Minh Thao, head of business environment and competitiveness at the Central Institute for Economic Management, said however that having multiple tax rates could pose a challenge for authorities.

It would require a lot of research and data on health impacts, she pointed out.

Chu Thi Van Anh, vice president of the Vietnam Beer - Alcohol - Beverage Association, said businesses understand that the tax is meant to protect consumers’ health.

"A 10% tax on sweetened drinks should have scientific bases and a careful assessment of the tax’s impacts on consumers and manufacturers is needed."

Thao said more evidence is needed for the impacts of soft drinks and other sweetened products on health, emphasizing that fairness and businesses’ potential losses should be factored into the policy-making process.

The government is obtaining feedback on the tax proposal before sending it to the National Assembly in October.

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