E-Malt.com News article: Vietnam: Sharp increase in special consumption tax on beer proposed instead of small annual ones

National Assembly delegate Hoang Van Cuong (Hanoi delegation) has proposed a sharp, one-time increase in special consumption taxes on tobacco, alcohol, and beer in Vietnam rather than small, annual increases, VietNamNet.vn reported on March 26.

On the morning of March 25, specialized National Assembly delegates discussed the draft amendment to the Law on Special Consumption Tax, focusing on proposed tax policies for gasoline, air conditioners, alcohol, and beer.

The Economic and Financial Committee of the National Assembly reported that some opinions suggested exempting gasoline and air conditioners from special consumption tax, as they are considered essential goods.

Regarding alcohol and beer, many opinions suggested maintaining a 65% tax rate on beer for about two years, with an increase to 70% from 2027 or 2028 and a roadmap of 5% per year thereafter.

Others recommended a unified tax rate for all alcohol types, regardless of alcohol content, similar to the rate for beer.

The drafting and review agencies noted that excessive beer consumption has severe socio-economic consequences, placing a heavy burden on public health systems and social welfare.

Therefore, imposing high taxes on these products is necessary to reduce consumption and mitigate harmful effects.

Current laws already stipulate high tax rates on beer to regulate production and limit consumption, thereby minimizing public health risks and economic impacts.

To significantly reduce alcohol and beer consumption and address the severe consequences of overuse, the draft law proposes an 80% tax on alcohol and beer starting in 2026, with a 5% annual increase for five consecutive years, reaching 100% by 2030.

However, the proposed tax rates and roadmaps have sparked controversy among producers and businesses.

Some industry associations argue that imposing such high taxes would severely impact production, related industries, tourism, and raw material regions, potentially affecting GDP growth targets.

Given these concerns, some have suggested adopting a slower tax increase to avoid causing difficulties for businesses and to maintain economic growth as set by the National Assembly

Delegate Hoang Van Cuong supported the idea of levying special consumption taxes on tobacco, alcohol, and beer, as these products adversely affect public health.

However, he emphasized that the method of taxation should effectively change consumption behavior.

The draft law suggests a 5% annual increase from 2026 to 2030 for alcohol and beer and an additional 1,000 VND per pack of cigarettes each year.

"Does a steady 5% increase actually change consumer behavior, or does it become an incremental change that people easily adapt to?" Cuong questioned.

He argued that gradual, predictable increases might not effectively discourage consumption, as people could gradually adapt to higher prices.

Therefore, he proposed abandoning the annual tax hikes and instead implementing a single, substantial increase every few years.

Delegate Hoang Duc Thang (Quang Tri delegation) expressed concern that businesses are still struggling to recover from the COVID-19 pandemic and that sharp tax hikes could backfire.

Consumers might turn to homemade or smuggled alcohol, leading to increased illegal trading.

Moreover, heavy taxation on alcohol and beer could affect the livelihoods of millions of workers, creating a "shock" to employment and social welfare.

Therefore, he advocated for a balanced approach that allows businesses and the market time to adapt while achieving social harmony and welfare goals.



28 March, 2025