The Ministry of Health has proposed a 40% special consumption tax on sweetened beverages, arguing that the 10% tax outlined in the Finance Ministry’s draft law is insufficient to influence consumer behavior.
The draft Law on Special Consumption Tax, set to be presented to the National Assembly this month and expected to pass in May next year, suggests a 10% tax on sweetened beverages containing 5 gr of sugar per 100 ml. According to the Ministry of Finance, this 10% tax is aimed at encouraging manufacturers to produce and import low-sugar products while raising public awareness.
However, the health ministry believes a higher tax is necessary.
“A 10% tax will only increase retail prices by 5%, which is not enough to change consumer behavior,” said Hoang Thi Phuong from the Department of Legal Affairs at the Ministry of Health.
The World Health Organization (WHO) recommends that retail prices of sweetened beverages should rise by at least 20%, which corresponds to a 40% special consumption tax.
According to the WHO, this tax hike would not only improve public health but also boost the national budget and cut healthcare costs related to sugar-related illnesses.
A study by WHO and HealthBridge Canada estimated that a 40% tax could add VND17.4 trillion (US$684.77 million) to Vietnam’s national budget.
The University of Public Health projected that the tax could lower the rates of overweight individuals by 2% and obesity by 1.5%, prevent over 81,000 cases of type 2 diabetes and save $24.55 million in healthcare expenses.
Globally, the number of countries imposing special consumption taxes on sugary drinks has surged from 35 in 2009 to 104 in 2023. In Southeast Asia, countries like Thailand, the Philippines, Laos and Malaysia have already adopted similar taxes.
In Vietnam, the consumption of sugary beverages has spiked dramatically, increasing from 1.59 billion liters in 2009 to 6.67 billion liters in 2023, a rise of 420%. Health experts attribute this trend to rising rates of obesity and metabolic disorders among both adults and children.
In addition to sugary drinks, the Ministry of Health is also advocating for higher taxes on alcoholic beverages and tobacco to safeguard public health.
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