Proposal to postpone the time to increase special consumption tax on alcohol

Risk of increasing difficulties for businesses

At the Consultation Workshop on completing the draft Law on Special Consumption Tax (SCT) organized by the Vietnam Federation of Commerce and Industry (VCCI) on March 18, 2025, many experts, businesses, and associations believe that increasing special consumption tax on alcohol and beer from 2026 could put great pressure on the economy and businesses in the current context.

Mr. Can Van Luc, member of the National Financial and Monetary Policy Advisory Council - assessed that tax reform needs to be cautious so as not to cause more difficulties for businesses and workers. Increasing special consumption tax will make it difficult for businesses to consume goods and have to narrow production. This will cause workers to lose their jobs and affect social security and economic growth. In particular, increasing special consumption tax on beer and alcohol will cause consumers to switch to other goods, causing illegal alcohol consumption to increase, affecting consumers' health and the State's budget revenue loss".

Ms. Tran Ngoc Anh - Senior Director of External Affairs, HEINEKEN Vietnam - also cited research from the Central Institute for Economic Management (CIEM) in collaboration with the Institute for Strategy and Policy Research on Industry and Trade and the Vietnam Drinking Institute, saying that the tax increase from 2026 could reduce GDP by an average of 0.08% in the 2026-2030 period. In particular, workers' income will be affected, a decrease of about VND 4,585 billion. This has affected the purchasing power of the domestic economy, putting pressure on GDP growth targets.

Another concern pointed out by many experts and businesses is that a strong tax increase will encourage consumers to switch to unofficial beer and alcohol products. According to Ms. Anh, Nielsen recorded that unofficial beer output in 2024 increased by 71%, accounting for 5.8% of the national market share, in the Mekong Delta alone, it accounted for 8%. This not only causes budget losses but also poses potential health risks because the product does not pass quality inspection.

Proposal to postpone tax increase time

Faced with the above shortcomings, Ms. Tran Ngoc Anh has made 3 recommendations:

"First, it is necessary to conduct a comprehensive impact assessment, with the participation of independent research organizations to ensure a scientific basis for tax policies, organize full consultations with affected subjects and consider economic development factors to avoid disruption to the beer industry and related industries.

Second, the drafting committee needs to consider a reasonable tax increase roadmap to minimize negative impacts on the goals of the Government, businesses and consumers, thereby maintaining economic growth momentum. We would like to propose postponing the tax increase to 2027.

Third, assessing the impact of this special consumption tax increase needs to include a study on consumer behavior, contributing to determining the impact of increasing the price of beer products on the needs and health of the community".

Sharing the same view, the Vietnam Beer - Alcohol - Beverage Association (VBA) proposed to postpone the time to apply the tax increase, because businesses need more recovery time after a difficult period.

VCCI also proposed organizing a field survey, studying consumer behavior and the impact on employment and purchasing power to ensure a harmonious tax policy between the goals of state management and business development.

Mr. Can Van Luc especially noted that it is necessary to place tax policies in the overall context, closely coordinate with other macroeconomic policies, avoid weakening domestic demand, which is a pillar of current economic growth.