Calls made to avoid “unfair” tax methods

Do Thai Vuong, head beverage Subcommittee Vietnam Beer-Alcohol-Beverage Association

Soft drinks with sugar content above 5g/100ml should not be subject special consumption tax (SCT) in Vietnam, because in reality there has not been a full and comprehensive study as well as further assessment of the impact of the tax on direct and indirect subjects in terms of the economy and society.

This is the consistent opinion of the soft drink industry in Vietnam, as sent to relevant ministries and sectors in documents sent for comments on the draft law.

In the current draft law, Article 2 is not sufficient enough or comprehensive because Vietnamese standards are not the basis for lawmaking.

Health drinks and sports drinks are expected to be taxed, while other drinks and foods containing even higher amounts of sugar are not subject to SCT. This will likely lead to discrimination and unfairness in the development of various state legal regulations.

According to statistics from the Food and Agriculture Organization of the United Nations and a report by Nielsen in Vietnam, the amount of free sugar from sugary drinks accounts for only about 1.1 per cent of the total energy intake from food and drinks.

Meanwhile, according to the World Health Organization, the amount of free sugar intake into the body daily is allowed to be at 5 per cent of the total energy intake (equivalent to 25g/day). Thus, if there is sugar abuse in the daily diet of Vietnamese people, the majority of this comes from other sources of sugary foods.

From the perspective of many businesses in the beverage industry in Vietnam and beyond, other countries have been applying effective measures, which are education and propaganda to raise people’s awareness regarding sugar and calorie intake. As health experts share, calories come from many sources of food and beverages, and not only from sugar.

At present, businesses are researching vitamin and mineral supplements. The industry itself has been implementing product lines that are good for health. The key issue here is that we need to propagate to raise people’s awareness so that people are aware of controlling the number of calories they take in compared to the calories they burn.

Assoc. Prof. Dr. Truong Thi Tuyet Mai Deputy director National Institute of Nutrition

Many people wonder why we only impose SCT on sugary soft drinks and not on other products such as cakes or sweets.

The reason for choosing sugary soft drinks is because they contribute up to 25 per cent of free sugar consumption in adults and 40 per cent of free sugar consumption in adolescents.

According to the results of a general nutrition survey, there are areas where up to one-quarter of people consume more free sugar than recommended. Of which, the contribution of sugary drinks is massive.

With other products such as tea and cakes, we are continuing to communicate so that people limit their use and limit their intake of such products.

The government uses many different measures to control the consumption of foods containing a lot of sugar. In other areas, implementation must have a roadmap, gradually taxing items.

Phan Minh Thuy, head of Legislation Vietnam Chamber of Commerce and Industry

This policy needs to be carefully considered in the following aspects: Firstly, the goal of preventing overweight and obesity is necessary and receives support from businesses. However, how the 10 per cent SCT on sugary soft drinks will help limit or reduce the rate of obesity has not been fully assessed.

According to research, foods containing sugar provide an average of 3.6 per cent of the total energy intake. Thus, a 10 per cent tax rate on sugary soft drinks can only reduce a minimal amount, about 0.1-0.2 per cent of the energy that is consumed.

Secondly, this tax policy does not ensure fairness when focusing only on ready-to-drink bottled drinks. On-site drinks such as coffee, milk tea, sugarcane juice, and lemon tea will be difficult to tax because the sugar content cannot be accurately determined. In addition, if sugar is considered the cause of overweight and obesity, it is necessary to consider and evaluate the impact of other sugary products.

Thirdly, this policy will negatively impact Vietnamese beverage enterprises, especially purely domestic enterprises. Foreign enterprises have experience and technology in switching to sugar-free but still sweet beverage products. Meanwhile, purely domestic enterprises face many more difficulties when the tax policy is implemented.

Budget revenues after the first year will decrease compared to the first year, due to the effect of the target of taxing sugary soft drinks to raise awareness of consumers and manufacturers. For businesses, applying SCT on sugary soft drinks with sugar content over 5g/100ml will encourage businesses to change the ingredients and formulas for producing soft drinks, reducing the sugar content in the products to avoid the tax.

However, implementing SCT on these items will increase the selling price, thereby reducing consumer demand. Therefore, it may affect the output, revenue, and profits of businesses producing and importing this product and related supporting industries such as sugar cane, packaging, and retail in the early stages.

However, the proposed tax rate of 10 per cent on the selling price of production facilities will have a modest impact on the retail price of products, so the negative impact on the production and business activities of businesses is not substantial.

Therefore, it is recommended that a more thorough assessment of the impact and appropriate roadmap for the policy on sugary drinks be made.