Excise tax on sugary drinks needed as soon as possible: Vietnamese finance minister

Minister of Finance Nguyen Van Thang said a tax on sugar-sweetened beverages should have been introduced earlier, warning action cannot wait until the next generation is already facing obesity and related illnesses.

The minister shared his view while presenting the draft amended Excise Tax Law to the National Assembly, Vietnam’s highest legislative body, on Thursday.

According to the document, beverages containing more than 5 grams of sugar per 100 milliliters would be subject to a special consumption tax starting in 2027, a one-year delay from the earlier plan.

The tax would begin at 8% in the first year and rise to 10% from 2028 onward.

Although the drafting and feedback process drew mixed opinions on whether sugar-sweetened beverages should be taxed, there is clear ground for moving forward with the tariff, the minister said.

He cited the World Health Organization (WHO) as saying that Vietnam, one of the countries with rapidly rising consumption of sugary drinks and a high risk of obesity, should introduce a tax on sugar-sweetened beverages.

Addressing a workshop for journalists on sugar-sweetened beverages in April, WHO representative in Vietnam Angela Pratt said there’s now strong evidence that people who regularly drink sugary drinks face an increased risk of type 2 diabetes, heart disease, stroke and cancer. "These are Vietnam’s biggest killers."

WHO guidelines say that each day, people should consume no more than 50 grams of sugar from all food and drinks – but from an optimal health perspective, it should be even less.

Unfortunately, in Vietnam, consumption of these drinks is high and increasing. People in Vietnam drank four times as many sugary drinks in 2023 as in 2009.

On average, every person in Vietnam is drinking nearly 70 litres of sugary drinks a year – or one and a third liters every week.

“The habit is also linked to weight gain and obesity in both children and adults, which are major risk factors for many diseases, and especially unhealthy for children,” she said.

“However, there’s a proven solution that can help: use a price signal, that is, a tax to make these drinks more expensive and thereby lower consumption.”

Pratt said around the world, about 110 governments now tax sugary drinks, adding the experience from all these countries shows that this tax is win-win - a win for health and reduced health-care costs, and a win for government revenue.

According to Thang, WHO recommended that retail prices of sweetened beverages should rise by at least 20%.

At the legislative meeting, Pham Van Hoa, a parliament member from the Mekong Delta province of Dong Thap, said the proposed tax on sugary drinks should be considered more carefully and implemented with a more reasonable roadmap.

He argued that while the government regards the tax as a measure to curb childhood obesity, in reality, many products contribute to the condition, not just sugary beverages.

Tran Van Khai, a full-time member of the National Assembly’s Committee on Science, Technology and Environment, also said the proposed 10% tax on sugary drinks is not entirely reasonable.

He warned it could lead to expected consequences, as natural products like coconut water and fruit juice might be lumped together with carbonated soft drinks.

Two hundred thousand coconut farmers and hundreds of processing enterprises are concerned about whether their processed coconut water products will be classified as taxable beverages, he said.

“Applying the same 10% tax rate as sugary soft drinks is inappropriate and could negatively impact agricultural production.”

The legislator suggested a combination of solutions, including the intensification of nutrition awareness campaigns to change consumer behavior, instead of imposing a tax.

He said the tax rate should start at 5-8% in the first year of implementation.

Meanwhile, Nguyen Thi Viet Nga, a parliament member from the northern province of Hai Duong, voiced support for the special consumption tax on sugary drinks as outlined in the draft law.

In addition to boosting state revenue, she explained, the tax would help guide consumer behavior, protect public health, and encourage businesses to develop healthier products.

However, Nga recommended that the draft law more clearly define the sugar threshold of 5 grams per 100 milliliters based on Vietnamese standards, to avoid blanket application of the tax to health-beneficial products such as milk and fruit juice.

Earlier, Prof. Nguyen Mai, former chairman of the Vietnam’s Association of Foreign Invested Enterprises (VAFIE), suggested authorities not levy the tax on sugary drinks.

Speaking at a workshop on excise tax in Hanoi in March, organized by the VAFIE - the parent entity of The Investor, Prof Mai said excise tax means to curb consumption and can hurt the country’s growth.

In case the legislative body insists on passing the law, Mai said sugary drinks should not be subject to excise tax in the first two years (2026-2027) as initially planned.

In the next three years (2028-2030), the excise tax should be 5% for all sugary drinks, regardless of their sugar ingredients. From 2031, a blanket excise tax of 10% is recommended.

At a working session with National Assembly Vice Chairman Vu Hong Thanh in March, a delegation of the US-ASEAN Business Council (USABC) also suggested that Vietnam should phase out any excise tax impositions on sugary and alcoholic drinks.

The legislature is scheduled to vote on and pass the draft amended Excise Tax Law on June 13 this year.