Lawmakers make case for consumption tax additions

Speaking at the National Assembly (NA) discussion session last week, deputy Cam Thi Man representing the north-central province of Thanh Hoa agreed with the addition of sugary beverages to the special consumption tax (SCT) to contribute to orienting consumption, encouraging businesses and consumers to switch to sugar-free products, and contributing to limiting overweight and obesity numbers as well as non-communicable diseases.

The draft law proposes to impose a tax on soft drinks according to Vietnamese standards, Photo: Le Toan

However, the impact assessment research report stated that the beverage industry accounts for 38 per cent of the number of enterprises in the beverage industry. “Regarding the impact on budget revenue, the calculation results show that when applying a 10 per cent SCT, the production scale of enterprises is narrowed,” Man said. “At the same time, the imposition of tax not only affects the beverage industry, but also affects dozens more. The consequences affect the entire economy, leading to a decline in GDP.”

She called for balancing the goal of guiding consumer behaviour with the production and business of enterprises trading in such products, and said the government needs to explain more clearly the goal of achieving this policy.

“In essence, is it to protect people’s health or just to increase budget revenue? Therefore, the addition of policies needs to be carefully considered for smooth implementation. Enterprises have time to develop business strategies and adapt promptly,” she added

Other deputies suggested that the law should expand the scope of the SCT to sugary drinks in general instead of sugary soft drinks.

“I am very concerned about the adverse effect of the proposal to impose SCT on sugary soft drinks because it may mislead consumers into thinking that only sugary soft drinks are not recommended for use. In fact, many other types of sugary drinks contain higher sugar content than soft drinks,” said Trinh Xuan An, NA deputy from the southern province of Dong Nai.

An said it is also necessary to avoid adjusting taxes on essential goods, and at the same time, to review the impact. “If taxes are increased too quickly, it will immediately affect enterprises and the business environment,” said An.

Deputy Prime Minister Ho Duc Phoc said the draft law proposes to impose SCT on soft drinks according to Vietnamese standards with sugar content of more than 5g/100ml. This standard will be regulated by the government. Therefore, when issuing the guiding decree, the government will stipulate which types of sugary soft drinks are not subject to SCT.

Regarding the SCT on air conditioners, NA deputy Ha Sy Dong representing the central province of Quang Tri said that in the past, air conditioners could be considered a luxury item.

“However, they have now become an essential need in work and life. Many studies have shown that maintaining a suitable room temperature effectively improves mental labour productivity,” Dong said.

Other countries control air conditioners in two other aspects, in terms of refrigerants and the level of electricity consumption. Currently, Vietnam has regulations on controlling refrigerants, in the direction of reducing import quotas for refrigerants that have negative impacts on the ozone layer and cause the greenhouse effect, Dong explained.

According to the reflection of businesses, due to the reduction in import quotas, the cost of purchasing refrigerants has increased continuously in recent times, increasing by an average of about 15-20 per cent per year.

“Vietnam also regulates energy efficiency for air conditioners and is increasingly moving towards increasing the minimum energy efficiency. Therefore, deputies believe that imposing an SCT on air conditioners is no longer necessary and should be abolished,” he said.