Health gains unlikely from Vietnam tax on sweetened drinks: AmCham

Adam Sitkoff, Executive Director of the Hanoi office of American Chamber of Commerce Vietnam (AmCham) said there was no conclusive evidence that taxing sweetened drinks will lead to better health of the Vietnamese people.

The Finance Ministry had said earlier that improved health of the people was a motivation behind the 10 percent special consumption tax proposed on soft drinks and other beverages with high sugar or fructose content.

And while it fails to achieve the aim of better health for the people, the tax could have a negative impact on the soft drink industry, Sitkoff said at the recent Vietnam Business Forum.

He said 40 countries in the world now impose a special tax on sugary drinks, but how effective it has been remains to be seen, he said.

Denmark is one of the countries which had previously imposed the tax but decided to abandon it as the tax did not achieve the proposed goals. Legislators in California, the U.S. has also voted against taxing sweetened drinks at least until 2031, the AmCham executive director said.

Deputy Finance Minister Nguyen Thi Mai said she would take these facts into consideration while the tax is modified.

Last year, the finance ministry proposed a 10 to 20 percent special consumption tax be levied on a range of sweetened beverage.

The proposal was objected to by different ministries and organizations.

The Ministry of Industry and Trade said that imposing a special consumption tax on soft drinks because they contain sugar was not a convincing enough reason.

The Vietnam Chamber of Commerce and Industry (VCCI), which represents thousands of businesses in Vietnam, also opposed the tax, saying a special tax should only be imposed after adequate studies have been made on the drinks’ impacts on consumer health and assessing how much the tax could help reduce the risks.

The Ministry of Agriculture and Rural Development has also demanded scientific evidence of why instant tea and coffee should be subjected to the tax.

But a letter from the World Health Organization (WHO) last September endorsed the proposal saying increase in prices could lead to a drop in consumption.

The finance ministry also cited a WHO report that shows excessive consumption of sugary drinks can lead to obesity which has been linked to many health risks such as cardiovascular diseases, hypertension and strokes.

A study unveiled in June last year found that about 25 percent of Vietnamese adults are overweight or obese. The obesity rate among children under five years old is also rising fast.

Vietnamese people are forecast to consume over five billion liters of sweetened drinks this year, nine times the consumption in 2000, and the figure is estimated to reach 11 billion by 2025, according to the National Institute of Nutrition.

Many Southeast Asian countries have already imposed taxes on sugary drinks, according to the finance ministry. The current rate is 20-25 percent in Thailand, 5-10 percent in Laos and 10 percent in Cambodia.

Myanmar, the Philippines and Indonesia are considering a similar tax.