Can taxes reduce overweight and obesity?
On November 22 and 27, the National Assembly will spend time discussing in groups and halls the Law on Special Consumption Tax (amended).
The proposal to add sugary soft drinks with a content of 5g/100ml or more to the list of subjects subject to special consumption tax at a tax rate of 10% is still facing many conflicting opinions among ministries, sectors, experts, scientists, businesses and consumers.
The Ministry of Health believes that a 10% tax rate is not enough to change consumer behavior, reduce the rate of overweight, obesity and non-communicable diseases and proposes to impose a higher tax rate (40%).
Meanwhile, the Ministry of Finance proposed to maintain the proposal of only applying a tax rate of 10% to encourage businesses to produce and import low-sugar drinks, raise awareness, and adjust consumer behavior.
According to the Ministry of Finance, “expanding the scope to full coverage needs to be carefully studied based on evidence and convincing arguments suitable to Vietnam’s conditions”. However, there are also opinions that both the expectation of increasing tax revenue or raising awareness and adjusting consumer behavior are not achieved for many reasons.
Due to the many different opinions on this issue, it is necessary to reconsider whether to add this item to the draft Law on Special Consumption Tax or not. Opinions have raised that imposing special consumption tax on sugary soft drinks will not increase budget revenue as expected, and at the same time cause negative impacts on the entire economy.
According to experts, applying the special consumption tax policy on sugary soft drinks may not change consumer behavior and has not proven effective in reducing the rate of overweight, obesity and other non-communicable diseases.
Associate Professor, Dr. Nguyen Thi Lam, former Deputy Director of the Vietnam Institute of Nutrition, said that if we only reduce the consumption of sugary soft drinks, we will not solve the problem of overweight, obesity and non-communicable diseases (blood pressure, cardiovascular disease, cancer, diabetes, etc.).
To prevent overweight, obesity and non-communicable diseases, it is necessary to increase communication about nutrition and health. Along with that, rational use of food sources; diet needs to increase the use of vegetables, fruits, fiber; increase physical activities...
Regarding this issue, Dr. Can Van Luc, an economic expert, said: Global data on the rate of overweight and obese people in 2016 and 2024 from the World Obesity Federation (WOF) shows that taxing sugar is unlikely to help reduce the rate of overweight and obese people.
Specifically, there are still more than 20 countries with an increasing rate of overweight and obesity in the period 2016 - 2024 despite many years of sugar tax.
For example, the US has taxed sugar since 2016, the rate of overweight and obesity increased from 42.1% to 42.7%, ranking 5th in the world; Brunei has taxed sugar since 2017, the rate of overweight and obesity increased from 14.1% to 23.2%, ranking 24th in the world...
Meanwhile, during the same period, 65 countries have never imposed a sugar tax, but the rate of overweight and obesity has decreased. For example, China's rate has decreased from 6.2% (2016) to 6.1% (2024); Indonesia's rate has decreased from 6.9% to 6.1%...
Notably, Japan does not tax sugar, but the rate of overweight and obese people has remained stable over the past 9 years, at 4.3% and is among the lowest in the world.
Weigh the benefits and costs
According to the drafting agency, if the proposal to impose a 10% special consumption tax on sugary soft drinks is proposed, the budget revenue will increase by about VND2,400 billion/year. However, the issue of costs and benefits needs to be further considered.
According to Associate Professor Dr. Ngo Tri Long, an economic expert, the principle of taxation is to ensure balance and harmony of interests between the State and taxpayers. This important principle ensures revenue for the state budget, but must not let taxpayers fall into a state of misery.
"Implementing this principle, the state will not create tax shocks for businesses, society, and workers. If the total tax payable is too large, the lives of workers will not be guaranteed; the economy will stagnate indirectly; the risk of tax evasion is very potential," Associate Professor Dr. Long warned.
With such a high rate of increase and the continuous annual tax increase in the current plans proposed by the Ministry of Finance, it will certainly lead to a severe decline in output, resulting in the Government losing tax revenue.
Therefore, it is necessary to carefully consider increasing taxes in the current economic context of Vietnam to avoid causing "shock" to businesses, while still ensuring state budget revenue.
