April 08, 2014
HA NOI — A 10 percent tax would be imposed on carbonated soft drinks under a revised draft of the special consumption tax law released by the Ministry of Finance last Friday, which would take effect in July 2015.
The ministry cited several studies that point out the potentially harmful effects of soft drinks on public health, suggesting that their consumption should be controlled in the same way as that of cigarettes and alcohol. However, some experts are vehemently opposed to the tax.
“These products are popular and consumed in almost all rural areas, so it would be bad for consumers,” said Phan Huu Thang, Director of the Global Integration Business Consultants, who argued that the move would also hurt the sugar manufacturing industry, retail distribution system and individual businesses.
Herb Cochran, director of AmCham Viet Nam in HCM City, said the imposition of a special consumption tax on products such as non-alcoholic carbonated soft drinks was “unfair” for consumers.
Special consumption tax was applied only for luxury products, which served the needs of a small group of people with high income, and products that had a negative impact on the environment and people’s health, he said.
Nguyen Thi Cuc, President of the Viet Nam Tax Consultancy Association, said Viet Nam should consider imposing such a tax, as many other countries have already done.
Tran Kim Chung, Deputy Director of the Central Institute for Economic Management, estimated that if the tax was imposed, the Government would collect US$8.4 million, the beverage industry would lose US$40.5 million, the country’s economy would lose US$12 million and GDP growth could decrease by as much as 0.01 per cent.
Moreover, demand for non-alcoholic soft drinks would reduce by 28 per cent, he said.
“At the beginning, tax collecting might increase a bit, but gradually it will go down,” Chung said. “On the flip side, labourers, jobs and suppliers of sugarcane and other materials will be negatively affected.”
(VNS)