Ministries protest special consumption tax on soft drinks

MoF is aiming to introduce a 10-20 per cent tax on soft drinks

According to newswire Vnexpress, in a document sent to MoF to contribute an opinion related the adjustment and addition of the SCT, the Ministry of Industry and Trade (MoIT) stated that citing soft drinks’ impact on health is not convincing enough to apply the SCT.

Besides, mentioning tea and coffee products that contain no added sugar in the soft-drink group makes MoF’s definition inconsistent. Thus, MoIT asked MoF to clarify the reasons for the application of SCT on soft drinks as well as the reason for issuing a quota on these products.

The Ministry of Agriculture and Rural Development (MARD) also disagreed with MoF’s proposal. The ministry stated that there has yet to be an official study showing that sugar drinks, including instant tea and coffee, causs obesity and diabetes in Vietnam, especially among children.

As Vietnam is stimulating the development of the agricultural product processing industry, MARD also asked MoF to clarify the definition of soft drinks, and simultaneously proposed to remove instant tea and coffee from the subjects to the SCT.

The Ministry of Planning and Investment proposed MoF to study the impact of this policy on the beverage sector, the state budget, and other factors, including jobs and production facilities.

According to the Association of Tea of Vietnam, mentioning instant tea on the list will impact the operation of tea manufacturing firms as well as tea growing households.

Associate Prof. and PhD Ngo Tri Long proposed that the calculation of the SCT needs to be based on the percentage of sugar content in each soft drink product.

Responding to the above opinions, MoF quoted a report from WHO, which shows that consuming too many drinks containing added sugar will have a negative impact on health.

WHO also stated that 40 countries currently apply SCT on soft drinks. Besides, three countries in the ASEAN, namely Myanmar, the Philippines, and Indonesia, are also considering applying SCT on soft drinks.

According to the calculations of MoF, applying the SCT of 10 per cent on soft drinks from 2019 will contribute over VND5 trillion ($220.2 million) to the state budget per year.

This is not the first time that MoF’s proposal has received objections. In February 2014, government agencies and beverage companies, and most notably, foreign beverage producers in Vietnam showed pronounced opposition to MoF’s proposal from the moment it made headlines.

Finally, in August 2014, MoF decided to withdraw its proposal.

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