Avoid scratching when applying special consumption tax
At the Workshop "Supporting economic growth - Perspective from businesses subject to special consumption tax" organized by Nhan Dan Newspaper on April 22, 2025, experts and businesses recommended a reasonable tax adjustment roadmap to avoid causing "shock" to the market.
Dr. Can Van Luc - BIDV chief economist - said that special consumption tax is a tool to regulate consumer behavior, but if the design is unreasonable, it will have the opposite effect. The shift market could decline, causing smuggled goods, floating goods and budget losses, he said.
Citing the data in 2024, he said the size of the beverage market will reach 15.5 billion USD, beer consumption will be about 4.4 billion liters - almost unchanged compared to last year, while soft drinks will increase by 4.8%. Despite signs of recovery, the industry is still heavily affected after three consecutive years of decline. He warned that if the tax increase is too fast, output will decrease, leading to a decrease in revenue from VAT and corporate income tax. Applying a common tax rate to products with different alcohols may also cause difficulties for the market and implementation.
From the above analysis, Dr. Can Van Luc proposed some specific policy orientations. In particular, it is necessary to calculate a particularly suitable roadmap for increasing consumption tax to avoid causing "shock" to businesses and the market. extend the application of the law, possibly until 2028 to create conditions for businesses to adapt.
At the same time, consider applying different tax rates depending on alcohol concentration, sugar content... to avoid taxing at the rate. Synchronize many policies: protect legitimate products, combat smuggling, increase local management capacity...
Ensure synchronization between the Law on Special Consumption Tax and related laws such as the Law on Alcohol Harm Prevention, the Law on Environment, the Law on Advertising, etc. Nourishing revenue sources by creating conditions for businesses to develop stably and long-term.
Dr. Can Van Luc affirmed that the amendment of the Law on Special Consumption Tax should not only focus on the goal of increasing short-term revenue, but should aim at the principle of harmonizing benefits between the State, businesses and consumers.
The tax increase roadmap needs to have appropriate delays
Dr. Le Duy Binh - Director of Economica Vietnam - said that in the context of a global economic downturn and many difficulties for domestic enterprises, tax policies need to play a supporting role even more. He cited that in 2024, the total value of the Government's fiscal assistance will reach VND191,000 billion, including tax, fee and land rent exemption, reduction and extension. In 2025, these policies will continue to be implemented to "enhance people's strength and fuel revenue".
According to him, it is necessary to choose a tax policy so that it can both achieve management goals and support growth recovery, retain investors and protect jobs for hundreds of thousands of workers in the industry and related supply chains.
Sharing the same view, Ms. Phan Minh Thuy - Head of the Legal Department of the Vietnam Federation of Commerce and Industry (VCCI) - also said that the roadmap to increase special consumption tax on goods such as alcohol and beer needs to be carefully calculated. VCCI proposes to start increasing taxes from 2028, in the direction of increasing by 5% every 2 years until 2030.
Ms. Thuy noted that tax increases are not certain to achieve the goal of regulating consumer behavior if there is a lack of valid scientific evidence. This can even increase the consumption of smuggled goods and legitimate aviation, posing risks to people's health and affecting long-term revenue. Tax policy needs to include in the package solutions to promote business internal strength and ensure socio-economic stability, she emphasized.
