Excise tax on sugary drinks not an optimal solution: int'l experience

International experience indicates that imposing an excise tax on sugary drinks is not an optimal solution to control and reduce obesity, experts said at a Friday workshop in Hanoi.

The event was hosted by the Vietnam's Association of Foreign Invested Enterprises (VAFIE), The Investor, and Dai bieu Nhan dan (People’s Representative) newspaper under the National Assembly Office.

The National Assembly, Vietnam’s highest legislative body, will discuss the draft amended excise tax law at its plenum next month and conduct an approval vote at the gathering in May 2025.

In the latest draft, the Ministry of Finance proposes an excise tax of 10% on sugary drinks as part of efforts to fight rising obesity in the country.

Nguyen Ngoc Yen, a lecturer at the Hanoi Law University, noted that there is no data proving the effectiveness of imposing an excise tax on sugary drinks in reducing obesity.

In fact, some countries like India, Thailand, Chile, Mexico, Belgium, Finland, and the Philippines that have implemented this measure have obesity rates go up even higher.

Other countries including Norway, Denmark and some states within the United States have abolished the excise tax on sugary drinks after finding it ineffective. Meanwhile, countries like Singapore, Germany and Japan have seen success in controlling obesity by promoting a healthy lifestyle and physical exercises.

International experience shows that excise tax against sugary drinks is not a suitable solution to reduce obesity and non-communicable diseases, Yen reiterated.

She called on authorities to consider other options.

Can Van Luc, chief economist with state-controlled BIDV bank, said 108 out of 192 nations have imposed an excise tax on sugary drinks (sugary tax), starting with Brazil in 1965 and Russia as the latest one in 2023.

In 2016-2024, 47 more countries began applying sugary tax as a fiscal policy to boost healthcare. In the Asean bloc, Laos, Brunei, Thailand, the Philippines, and Malaysia are implementing the tax.

However, the effectiveness of the tax in reducing obesity is questionable, Luc said, citing data from the World Obesity Federation as showing 21 countries with sugary tax recorded higher obesity ratios in the 2016-2024 period.

On the other hand, Japan has recorded a stable obesity ratio of 4.3% in the same period without resorting to the sugary tax, he pointed out.

This tax is easily avoidable, Luc said, adding that sugary drinks are only one of nine obesity-causing factors. He proposed a comprehensive solution to improve obesity awareness, instead of using a sugary tax.