It is necessary to adjust the special consumption tax on harmful goods to health

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The drafting agency proposed to research, supplement special consumption tax and increase special consumption tax on products that are not beneficial to health. Photo: H.Anh

According to the Ministry of Finance, the 2008 Special Consumption Tax Law has undergone three previous amendments, supplements in 2014, 2016 and 2022 to handle inadequacies that arise in practice and in accordance with tax management requirements in each period. However, according to the Ministry of Finance, in the current period of socio-economic development and in the coming time, the current policy of special consumption tax still has certain limitations that need to continue to be improved to further promote its role such as a subject subject to special consumption tax is still narrow compared to international practice; the special consumption tax rate on some goods that cause harm to health and society, as well as the regulation of some luxury goods is still low and has not achieved the goal of limiting consumption or regulating income of high-income users in society, etc.

According to practical requirements, it is necessary to amend and supplement the Law on Special Consumption Tax to resolve arising inadequacies, encourage conversion of import, production, and use of environmentally friendly products, and limit consumption of harmful goods to health.

According to the draft report on the proposal to develop a revised Law on Special Consumption Tax, the drafting agency has proposed implementing a policy to expand the tax base according to the Party and State's policies and in accordance with international practices (add taxable objects and apply of appropriate tax rates), specifically research to add special consumption tax to products that are not beneficial to health, the environment and services that are restricted from use according to the Party and State policies such as: sugary drinks; barley drinks and non-alcoholic beverages.

At the same time, adjust the excise duties for some harmful items to health, some items that contribute to environmental protection, specifically research to increase the excise tax rate for some items that are harmful to health (cigarettes, alcohol, beer) to limit import, production, consumption; research to adjust special consumption tax rates for some environmentally friendly products and overcome shortcomings arising in reality.

According to Ms. Angela Pratt, Chief Representative of the World Health Organization (WHO) in Vietnam, currently there is no product that causes a high mortality rate like cigarettes, creating a burden on health care and economy. In Vietnam, cigarette prices are still very cheap, people can easily access tobacco products that are available on the market. One of the reasons is because the tax rate on cigarettes is too low.

“One of the measures that WHO recommends and can implement is to tax products that are harmful to health such as cigarettes and alcoholic beverages along with reducing advertising and trade promotion activities to reduce consumption of harmful products. We all know that increasing tobacco taxes is the most effective measure to reduce consumption quickly and in a short time. Therefore, WHO recommends that the Vietnamese Government consider applying the highest possible tax rate to effectively reduce tobacco consumption in the near future," Ms. Angela Pratt suggested.

Supporting the direction of the Ministry of Finance to amend the Special Consumption Tax Law, including amending the tax calculation method for tobacco products, Ms. Angela Pratt emphasized that currently, the applied levels are not high enough, therefore, we have not seen a decrease in cigarette consumption.

According to Ms. Angela Pratt, for cigarettes, it is necessary to set a high enough tax rate to have an impact on the consumption of these harmful to health products. “In addition, excessive consumption of alcoholic beverages will lead to a series of negative health effects, therefore, increasing the tax rate applied to these products also needs to be high enough to have an impact on consumption. In other words, the basic principle is that Vietnam needs to set prices high enough to prevent people from buying these unhealthy products," WHO experts recommended.

Regarding the proposal to adjust tax rates for some products, specifically cigarettes, according to Ms. Tran Thi Tuyet, Tax Policy Department, Ministry of Finance, tobacco products have had their excise tax rates increased according to the roadmap from 2016-2019, but the smoking rate in Vietnam is still high and tends to increase.

According to WHO, WB, IMF, Vietnam's cigarette selling price is still low because the tax ratio on retail price is only about 38.85%, much lower than countries such as Thailand, Brunei, Malysia, etc. Therefore, there needs to be a roadmap to increase the excise tax rate on cigarettes according to the orientation of applying mixed taxes and additional absolute taxes.

Regarding the addition of sugary drinks as taxable objects, nutrition experts believe that the health burden is increasing due to the consumption of sugary drinks and the special consumption tax is one of three policies to reduce sugary drinks consumption.

According to Ms. Ngo Thi Ha Phuong, National Institute of Nutrition, taxing sugary drinks could be a win-win strategy, including benefits for public health (containment of health care costs), benefits in terms of increasing revenue for the state budget and benefits for health equity. This is also an opportunity for food manufacturing businesses to improve products, reduce sugar content in products, etc.

Taxing sugary drinks is an effective public health policy to reduce excess sugar consumption, limit consumption of sugary drinks, and can lead people to choose healthier alternatives.