The Sugar and Sugarcane Association has objected to the proposal by the Ministry of Finance to levy a special consumption tax of 10% on sugary soft drinks.
The Ministry of Finance has been completing and gathering opinions for the laws on a special consumption tax since late 2017. The ministry recently proposed levying a 10% special consumption tax and an increased VAT rate of 2% on sugary soft drinks, excluding dairy products.
According to the ministry, they want to curb obesity and diabetes. 25% of the Vietnamese adults are obese. The obesity rate among children under five years old went up from 0.6% in 2000 to 5.3% in 2015. This rate in HCM City was 10.8%, much higher than the world average rate of 6.9%. They also cited the World Health Organisation on the harmful effects of sugary soft drinks.
However, the Sugar and Sugarcane Association said this was not a common practice and the government must consider the impacts on the sugarcane and soft drinks industries. They said the government should levy the tax on high-fructose corn syrup sweetener which is being exempted taxes when being imported from ASEAN countries, China and South Korea.
It went on to say that only four countries in the Pacific-Asia region levy special consumption tax on soft drinks including Thailand, Brunei, Laos and Cambodia. Many other countries have dropped this tax due to its ineffectiveness such as Denmark, Indonesia and Egypt.
It also cited statistics from the World Health Organisation to prove that obesity rate still increased after soft drinks were taxed. For example, Thailand has implemented the tax for 30 years but the obesity rate among five to 19-year-old people increased from 3.1% in 2000 to 11.3% in 2016. The obesity rate among nine to 15 years old in Brunei also increased from 6.4% in 2000 to 14.1% in 2016.
According to the Sugar and Sugarcane Association, both tax and health experts can’t be sure about the effectiveness of the tax since there are many reasons that cause obesity and diabetes. Moreover, the consumption in the city, where residents with middle to high incomes live, isn’t likely to go down.