THE Vietnam Sugarcane and Sugar Association has voiced concerns against a government proposal to impose a special consumption tax of 10 per cent on sweet drinks.
According to the draft of the five revised tax laws put forward by the Finance Ministry, including the law on special consumption tax, the ministry has proposed to levy a special consumption tax of 10 per cent on sweet drinks, excluding milk, and to increase the value-added tax (VAT) by two percentage points from 2019.
The ministry finished collecting feedback on the drafts of amendments to these laws at the end of 2017, including laws on VAT, special consumption tax, corporate income tax, personal income tax and natural resources protection tax.
The aim of the proposal is to protect the health of consumers, especially to reduce obesity and diabetes. However, the Sugarcane and Sugar Association, businesses and consumers disagree with the proposal.
The association said the state should review the proposal comprehensively.
It said special consumption tax on sweet drinks is neither a popular practice in the world nor in the region, which comprises 25 per cent of the total countries in the world. Moreover, there is no evidence that levying tax on sweet drinks can improve the health of consumers, reported Nguoi lao dong newspaper.
Tax and health experts also do not guarantee that increasing taxes on sweet drinks will reduce the incidence of diabetes and obesity because there are many causes of these diseases besides food. Moreover, increasing taxes is unlikely to reduce sweet drinks’ consumption in urban areas, where middle- and high-income people can afford higher prices.
Therefore, the association has proposed the Ministry of Finance to reconsider its decision.
It said there is a need for a comprehensive report on the impact of this policy on domestic sugar and beverage production industries as well as on consumers and domestic economy.
The Vietnam Beer, Alcohol and Beverages Association has also opposed the proposal.
It said the price of beverages would surge by at least 12 per cent if the state imposes the special consumption tax on sweet drinks of 10 per cent, and increases VAT for those products from 10 per cent to 12 per cent and VAT for sugar from 5 per cent to 6 per cent.
Enterprises in the beverage production industry will find it difficult to compete and will face the risk of a reduced scale of production, it said.
At the same time, the Vietnam Sugarcane and Sugar Association said the State needs to exercise tight control on the use of high-fructose corn syrup (HFCS), the raw material for the production of beverages, to protect consumers’ health.
HFCS is a sweetener made from cornstarch that has been processed by glucose isomerase to convert some of its glucose into fructose.