Special consumption tax should be imposed on sugary drinks

The MoF is sticking with its proposal for a special consumption tax on sugary beverages, nutritional drinks and some other products, excluding milk.

Customers buy sugar beverages at a supermarket in Hanoi. A new tax on sugary drinks could bring positive change to the rapidly increasing issues of growing obesity in Vietnam. (Photo: VNA)

The Ministry of Finance (MoF) has proposed imposing a special consumption tax on sugary beverages.

In the latest draft of the Law on Special Consumption Tax sent to the Ministry of Justice for appraisal, the MoF has stuck with its proposal for a special consumption tax on sugary beverages, nutritional drinks and some other products, excluding milk.

The MoF said that there had been 100 written comments on the draft law from 16 ministries, five Government agencies, 49 localities, three international organizations, one embassy, ​​two international non-governmental organisations, and 25 associations and businesses as of April 11. Of these, 35 units have completely agreed, and 65 units basically agreed.

More specifically, the idea of adding sugary drinks to the list of items eligible for a special consumption tax has 74 unanimous opinions in favour and 26 other opinions.

The MoF explained that the addition of a special consumption tax on sugary drinks was implemented in accordance with State policy as outlined in Resolution No 07-NQ/TƯ and Resolution No. 20-NQ/ TU.

A common measure used around the world to reduce harm from sugary drinks is to increase prices with taxes, according to Dr Angela Pratt, the World Health Organization Representative in Vietnam.

The higher cost might help reduce consumption of sugary drinks. This could help slow the rise in obesity rates, especially in children, and help reduce the risk of non-communicable diseases in future generations, said Pratt.

In addition, other measures, including nutrition labelling on the front of drinks, restrictions on sugary drinks in schools and enhancing education on healthy nutrition for children and adolescents had also been effective measures to limit people's intake of sugary drinks, she added.

Queen's University Belfast researcher Nguyen Thuy Duyen agreed with the tax and affirmed that it would reduce consumption.

This policy could bring positive change to the issue of rapidly increasing obesity rates in Vietnam, she said.

The Dau tu (Investment) online newspaper quoted Duyen as saying that there were many ways to impose such a tax.

An absolute tax based on sugar content, an absolute tax based on volume or a tax based on factory price are three of the choices, according to Duyen.

But it will be necessary to come up with a plan to achieve high efficiency in limiting the consumption of sugar-sweetened beverages.

Another expert who also supports the plan to impose a special consumption tax on sugary drinks is Nguyen Tuan Lam, an expert from the World Health Organisation in Vietnam.

Talking to the online newspaper, Lam expressed concerns because consumption of sugary drinks has risen threefold in recent years.

Promoting a special consumption tax on sugary drinks would therefore be a long-term policy aimed at people's health, preventing this trend and guiding the market, he said.

Currently, more than 100 countries around the world have applied a similar policy, so Lam hopes that it will receive more widespread support.

Businesses also needed to be responsible for people's health and make products with less sugar, he added.

Ministries should also consider a variety of factors, ensuring balance and strong negative impacts on manufacturers, he said.

In terms of effectiveness, imposing taxes on sugary drinks would have many practical benefits, the most obvious of which would be a reduced consumption rate, he said.

Globally, it had been estimated that increasing taxes on sugary drinks by 50 percent would reduce deaths by 2.2 million within 50 years, he said.

As an economic expert, Dr. Dinh Trong Thinh also said that imposing a special consumption tax on sugary beverages would be an effective way to reduce consumption, which would contribute to the prevention and control of non-communicable diseases.

The expert argued that if a special consumption tax was applied, output might decline in the first few years, but would then recover and might continue to grow.

Special consumption taxes are levied on consumers to regulate their behaviour.

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