Enterprises may face many difficulties
The draft Law on Special Consumption Tax is one of the 34 bills that will be reviewed by the National Assembly at this session. One of the newly supplemented policies in the draft is "expanding the tax basis", which is stipulated: "Additional beverage (NGK) has sugar according to Vietnamese standards (TCVN) with sugar content of over 5G/100ml into the Tax tariffs" with a 10% tax rate because this is a new item, with the purpose of protecting people's health ...
However, when studying documents related to the draft, especially the explanation of the proposal, many opinions said that the drafting agency has not fully assessed the impacts of applying these regulations.
The opinion of some experts and scientific studies shows that the application of SCT as in the draft has not guaranteed the goal of "preventing and minimizing the overweight status", which is not effective on regulating consumer behaviors. At the same time, it is not guaranteed the fair principle of tax policy. On the other hand, the drafting agency has not had an interpretation of the basis of the proposal of applying the 10% of SCT tax rate for roads with roads.
According to National Assembly Delegate Pham Van Hoa, amending the Law on Special Consumption Tax is necessary, but it is necessary to carefully consider and consider proposals to increase taxes and expand taxpayers such as the case of a sugar-based exporting enterprise.
Delegate Hoa added that at the 8th Session and some seminars and discussions, there were many opinions that it is necessary to comprehensively assess because according to the assessment of the beverage industry, applying tax on sugary NGK products is ineffective in the goal of preventing and reducing overweight and obesity. This does not ensure fairness, reasonableness, incorrectness, and is not advisable because NGK is not the main and only cause of overweight and obesity.
National Assembly delegate Ta Van Ha supports the search for harmonious and fair solutions, when to apply taxes, how much tax rate is reasonable. There needs to be a fair and impartial view when building special consumption tax. It is necessary to include many goals, especially the growth target in the current period.
Prof. Dr. Hoang Van Cuong, member of the National Assembly's Economic and Financial Committee, is concerned about the current context, we are finding ways to stimulate domestic consumption, reducing taxes to support businesses. If we increase taxes, expand the subjects subject to special consumption tax such as for sugar-based export enterprises, businesses will face many difficulties and challenges that can affect domestic consumption stimulation solutions.
Proposal to sharply increase tobacco taxes
Meanwhile, for tobacco products, many experts recommend a strong and early tax increase. Dr. Nguyen Ngoc Anh - Director of the Center for Policy Research and Development (DEPOCEN) - clearly stated whether the contents of tax increases will affect production or the budget and the economy? Will tax increase increase increase cigarette smuggling? Should we extend the roadmap for increasing tobacco taxes? And the answer to the above questions is "No".
Doctor Phan Thi Hai - Deputy Director of the Tobacco Harm Prevention Fund (Ministry of Health) - said: In 2022, Vietnam will lose 108,000 billion VND (1.14% of GDP) to diseases and deaths from tobacco. This figure is 5 times larger than the contribution of tobacco tax revenue to the budget.
According to Ms. Hai, Vietnam has increased special consumption tax on tobacco 3 times in the period 2008-2019. However, the increase is still low and the time gap between adjustments is too long, not enough to affect consumer behavior.
"The current 75% tax rate is only calculated on the factory price. For example, for a retail price of 10,000 VND, the factory price is only about 3,900 VND. The additional 5% tax increase is equivalent to a price increase of less than 300 VND (3%), lower than the inflation rate (4%) and income increase (5%). Therefore, this adjustment almost does not affect smoking habits" - Dr. Hai said.
Tobacco taxes in Vietnam are currently among the lowest in the world. According to retail prices, the tobacco tax rate in Vietnam is only 36%, lower than the recommendation of 70-75% of the World Health Organization (WHO) and many countries in the region such as Thailand (78.6%), the Philippines (71.3%) or Singapore (67.5%).
According to the Ministry of Health, there are currently more than 15 million smokers nationwide. Each year, cigarettes cause about 104,300 deaths from direct or passive smoking. Meanwhile, the revenue from tobacco taxes is still not enough to cover medical expenses and labor productivity losses caused by the harmful effects of tobacco.
To increase the effectiveness of tobacco consumption control, Vietnam needs to quickly adjust tax policies in the direction of absolute taxation, building floor prices and increasing the minimum tax rate. WHO and the Ministry of Health propose to add an absolute tax of at least VND 5,000/bag by 2026, increasing to VND 15,000/bag by 2030, in parallel with the current rate tax (75%).
