Beverage industry lobbies against taxing sweetened drinks

At a Wednesday workshop to discuss draft amendments to the Law on Special Consumption Tax, Nguyen Thi Lam, former deputy director of the National Institute of Nutrition, cited data showing that obesity is related to an imbalance between energy intake and outtake, and the frequency of physical activity.

“Fat in food causes overweightness and obesity more than drinking soft drinks. There is no link between sweetened beverages and obesity,” she said.

The Ministry of Finance is again considering imposing a tax on sweetened beverages eight years after failing to get other ministries to back it. The ministry said that a “reasonable” special consumption tax on sugary drinks would help protect people’s health in line with World Health Organization recommendations and international practices.

Chris Vanloon, Chairman of the American Chamber of Commerce (Amcham) in Da Nang, said there is currently no definition of “sugary drinks,” so on the basis that the Ministry of Finance provides, the special consumption tax could be imposed on milk, dairy products, special foods for children and women, as well as sports drinks with electrolytes.

Do Thai Vuong at the Vietnam Beer-Alcohol-Beverage Association said the beverage industry is still recovering from the Covid pandemic, facing global economic uncertainties and increased production costs.

Beverage businesses need a stable tax policy environment to return to the numbers they were putting up pre-pandemic, Vuong said.

He added that imposing the tax would be discriminatory without solving any public health problems.
The proposed policy would also cause unwanted consequences for related industries, such as sugar, retail, and packaging, he said.

A manager of Heineken Vietnam stated that the Ministry of Finance’s introduction of barley and non-alcoholic beverages into the taxable category was unreasonable.

According to him, similar factors in terms of materials, processing, forms and flavors are not a legal basis for imposing a special consumption tax.

“It is also inconsistent with the purpose of this tax — restricting or discouraging the consumption of products that are harmful to health,” he said.

Businesses say they want to give regulators more time to analyze and evaluate relevant factors comprehensively and thus develop a suitable tax schedule to avoid negative impacts on consumers and businesses.

However, Dinh Trong Thinh, an expert from the Vietnam Academy of Finance, said the tax rate could be 10%, similar to what Cambodia now applies.

In 2014 the Ministry of Finance had formerly proposed a similar 10% special consumption tax on sweetened beverages, but other ministries opposed it.

It is also considering hikes in the special consumption tax on beer, other alcoholic beverages and cigarettes.

Between 2016 and 2019 it had increased the rate on beer and certain alcoholic beverages from 55% to 65% and on cigarettes and cigars from 70% to 75%.

At the workshop, businesses suggested delaying the hikes, at least until 2025.