Vietnam chews over special consumption tax on sugary drinks
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The tax could help combat the country’s rapidly increasing obesity rate. The Ministry of Finance on Tuesday proposed levying a special consumption tax on a range of sweetened beverages. If approved, the proposal would see the tax imposed on carbonated and non-carbonated soft drinks, energy drinks, sports drinks and bottled instant coffee and tea.
The ministry has suggested either a 10 percent or a 20 percent rate for the new sugary drink tax to be applied from 2019, with 10 percent being the preferred option.
“The tax will help regulate the consumption of sweetened beverages, and it’s also an international norm,” the proposal said.
A can of carbonated soft drink, for example, currently costs around VND10,000 ($0.44).
At Tuesday’s press conference, the ministry cited a report by the World Health Organization (WHO) that shows excessive consumption of sugary drinks can lead to obesity. Obesity, in turn, has been linked to many health risks such as cardiovascular disease, hypertension and strokes.
Meanwhile, a study unveiled in June found that about 25 percent of Vietnamese adults are overweight or obese. The obesity rate for children under 5 years old is also rising fast.
Many Southeast Asian countries have already imposed sugary drinks taxes, according to the ministry. The current rate is 20-25 percent in Thailand, 5-10 percent in Laos and 10 percent in Cambodia.
Myanmar, the Philippines and Indonesia are also considering imposing the tax.
In Vietnam, special consumption taxes are levied on items and services considered unhealthy or luxurious such as tobacco, alcoholic drinks and cars.
Questions & Answers
Q.What types of drinks would be subject to the proposed special consumption tax?
What types of drinks would be subject to the proposed special consumption tax?
The proposed tax would apply to carbonated and non-carbonated soft drinks, energy drinks, sports drinks, and bottled instant coffee and tea. These categories cover a wide range of popular sweetened beverages.
Q.What tax rates are being considered for sweetened beverages, and when might the tax be implemented?
What tax rates are being considered for sweetened beverages, and when might the tax be implemented?
The Ministry of Finance has suggested either a 10 percent or a 20 percent rate, with 10 percent being the preferred option. If approved, the tax would be applied from 2019.
Q.What health concerns are driving the proposal for this new tax in Vietnam?
What health concerns are driving the proposal for this new tax in Vietnam?
The tax aims to combat Vietnam's rapidly increasing obesity rate, which has been linked to serious health risks like cardiovascular disease, hypertension, and strokes. Studies show rising obesity in both adults and children.
Q.Have any other countries in Southeast Asia already implemented similar taxes on sugary drinks?
Have any other countries in Southeast Asia already implemented similar taxes on sugary drinks?
Yes, several Southeast Asian countries have already imposed such taxes. Thailand has a rate of 20-25 percent, Laos 5-10 percent, and Cambodia 10 percent. Others like Myanmar, the Philippines, and Indonesia are considering them.