Vietnam: Beer industry forum warns against further tax hikes
Taxes on alcohol and soft drinks should not be hiked again in the next few years since successive hikes in special consumption tax have had a strong impact on the market, a round table organised by the Viet Nam Beer, Alcohol and Beverage Association heard in HCM City on November 22.
Since 2013 the special consumption tax on alcoholic beverages and beer has been raised four times.
From next year it will be 65 per cent.
Speaking to Viet Nam News on the sidelines of the forum, Nguyen Van Viet, the association chairman, said the growth of the beverages market in the first eight months of this year was 7 per cent, the same level as previous years.
“The growth was mainly due to soft drinks, which have not been affected by the tax. Alcoholic drinks saw no growth while beer witnessed low and steady growth.”
The impact of the tax hikes would be clearer a year or two down the line and so the growth next year would not be higher than in 2017, he said.
Experts cited the example of Japan, which takes around 10 years to bring in a new policy, saying Viet Nam too should be consistency in policy making.
The tax on beer and spirits has been increased by 20 per cent in just five years, they lamented.
Trieu Quang Thìn, vice chairman of the Ha Noi Association for Anti-counterfeiting and Trademark Protection, warned that as the huge tax hikes push up prices, consumption would decline and companies would look for ways to evade taxes.
Furthermore, it could give rise to smuggling and fake products, he said.
Shivam Misra of the EuroCham Wine and Spirits Sector Committee concurred with him, telling the forum the Government could actually lose revenues due to the tax hikes.
Higher taxes would give rise to illegal products, he explained.
But assuring they would not evade taxes, delegates called for a road map with taxes hiked at a slower rate so that companies have time to prepare and avoid shocks.
The beverages sector is one of the biggest in the country and accounts for 5 per cent of the Government’s revenues.
The sector has grown consistently for many years, and exports many products.
20 November, 2017
