Experience in levying special consumption tax on sweetened beverages in many countries

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Taxation is implemented in the context that sweetened beverages are harmful to human health.Photo: Internet

According to the National Institute for Finance, taxes on sweetened beveragesare applied in many countries in Europe, South America, North America and Asia. Taxation is implemented in the context that sweetened beverages are harmful to human health.

In South Africa, the tax on sweetened beverages has been applied since 1 April 2017, with the aim of reducing the amount of excess sugar absorbed in the user's body (preventing obesity due to excessive consumption of sugars). According to South African regulations, sweetened beverages are beverages boosting calories such as sucrose and HFCS of fruit juices.

The basis for calculating special consumption tax on sweetened beverages is the sugar content in beverages. This calculation is quite reasonable for tax calculation and the tax rate will depend on the sugar content in beverages.

The special consumption tax rate is 0.0229 R (equivalent to 2.29 cents/gram sugar. The absolute tax rate will increase 20% for most common beverages (such as Coca Cola with an average of 35g sugar/330ml).

In Mexico, from 1 January 2014, the country has imposed special consumption tax on beverages and high-calorie foods. Specifically, the special consumption tax on non-alcoholic beverages containing sugar is 1 peso/liter (equivalent to 10% of the selling price in 2013) and on high-calorie foods with a content of more than 275 calories/100g is 8% of the selling price.

In the US, in 2014, 34 states and Washington D.C.imposed sales tax for soda sold in grocery stores with ahigher tax rate than other foods. In March 2015, in Berkeley, California, special consumption tax for sweetened beverages was 1 cent/ounce (1 ounce = 30ml). In 2017, in Philadelphia (Pennylvania) was 1.5 cent/ounce; Boulder (Colorado) was 2 cent/ounce; Cook District (Illinois) and 3 cities (San Francisco, Oakland and Albany) was 1 cent/ ounce.

In the Philippines, the Special Consumption Tax on sweetened beverages (including non-alcoholic beverages, soda, energy drinks, sweetened tea and coffee in the form of powder or liquid) is 10 pesos/liter (excluding 100% fruit and vegetable juice; fruit-flavored yoghurt; alternative beverages; weight loss products and dairy products). This taxation aims to create a Health Improvement Fund to prevent harm caused by sugar consumption. According to the Philippine Ministry of Finance, this taxation will increase the budget revenue by 47 billion pesos in the first year.

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According to astudy by the National Institute for Finance, many other countries in the world have levied the Special Consumption Tax on sweetened beverages, including England, Hungary, Finland, France, Norway, Denmark andThailand.

From the experience of these countries, the National Institute for Finance said that if this tax is applied, Vietnam needs to specify between sweetened beverages and non-alcoholic beverages to differentiate related goods and specify beverages subject to tax. The tax rate on sweetened beverages needs to be specified to apply relative tax rate or absolute tax rate to each beverage. Particularly, Vietnam needs to assess the socio-economic impact to provide the best solutions.