HCMC – Vietnam’s economy could contract by 0.44%, amounting to a potential economic loss of VND42.57 trillion, if a proposed special consumption tax on sugary drinks is enacted, according to a report by the Central Institute for Economic Management (CIEM).
Nguyen Minh Thao, head of the Department of Business Environment and Competitiveness at CIEM, presented the findings at a workshop on October 17, discussing the economic impacts of proposed law changes.
The report estimates that a 10% excise tax on sugar-sweetened beverages would reduce the sector’s added value by 0.77%, or VND5.65 trillion. CIEM also warned that the tax could negatively affect 24 other industries, resulting in a 0.6% drop in total added value across the economy, equating to a VND55 trillion loss.
This tax could reduce Vietnam’s gross domestic product by 0.44%, or VND42.57 trillion. Corporate income tax revenue might fall by VND2.15 trillion, and workers’ total income could decrease by 0.6%, a loss of VND34.53 trillion across the economy.
The Ministry of Finance is drafting amendments to the special consumption tax law, which proposes adding sugary drinks with five grams of sugar per 100ml or more to the taxable items list, with a suggested 10% tax rate. However, some experts argue that the tax may not significantly alter consumer behavior or align with fairness principles in tax policy.
CIEM researchers urged the government to conduct broad consultations with stakeholders and make policy decisions based on comprehensive scientific and economic assessments.
