Draft law proposes new fat tax on carbonated soft drinks

Friday, Feb 28, 2014 09:09

Customers shop for soft drinks at OCEAN Mart in Ha Noi. A special consumption tax of 10 per cent is likely to be imposed on carbonated soft drinks due to their potential health effects. – VNS Photo Truong Vi

HA NOI (Biz Hub) — A special consumption tax of 10 per cent is likely to be imposed on carbonated soft drinks due to their potential health risks.

This is mentioned in the revised draft of the Law on Special Consumption Tax released by the Ministry of Finance recently.

The tax rate on the beverage is currently zero per cent.

The ministry said that several studies have pointed out the potentially harmful effects of soft drinks on public health, suggesting that their consumption should be controlled in the same way as that of cigarettes and alcohol.

The ministry cited the harmful effects of preservatives, high sugar content and other additives found in many such beverages, saying that higher taxes would dissuade their consumption.

It also mentioned the UK, France and Denmark as examples of countries which have applied special consumption taxes on soft drinks.

In Asia, Thailand, Laos and Cambodia also have levied extra sales tax on non-alcoholic beverages.

As a side note, the ministry stated that a 10 per cent tax would add VND1.5 trillion, or US$72 million, to the State budget by 2016. The revised law is expected to be passed this year and take effect in July 2015.

However, industry insiders said that more study should be done before imposing the tax, adding that the potential health risks of soft drinks have remained a controversial issue in the world.

Under the draft law, the special consumption tax levied on beer, wine and tobacco will also be hiked by 10 to 15 per cent from 2015, in a bid by the Government to reduce the consumption of these products.

The tax on beer, wine and tobacco products will hit a record high of 75 per cent in 2015, and is likely to go up to 85 per cent in 2018. The taxes are expected to contribute more than VND2.9 trillion, or $131.82 million, to the State budget in 2016 and VND7.7 trillion, or $350 million, in 2018.

The Ministry's statistics showed that beer and wine sales in 2013 were roughly 3 billion litres, equivalent to 32 litres per capita, making Viet Nam top the list of per capita consumption in Southeast Asia and No 3 in Asia, just behind China and Japan.

The excessive consumption of beer and wine has a negative impact on public health and threatens social security due to rising social evils, violence and traffic accidents, especially during festivals and holidays.

It will also be proposed that a 30 per cent tax be imposed on voting games and betting via texting. — VNS

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