Vietnam’s draft excise tax on sugary drinks needs more scientific basis: experts

Vietnam’s tentative excise tax of 10% on sugary drinks needs a more scientific basis, experts and businesses said at a Friday workshop on the excise tax in Hanoi.

The National Assembly, Vietnam’s highest legislative body, will discuss the draft amended excise tax law at its upcoming plenum in October and will vote on its passage at the next meeting in May 2025.

The workshop 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.

Can Van Luc, chief economist at state-controlled bank BIDV, stressed that the excise tax on sugary drinks has yet to show strong effects on reducing obesity and overweight. He quoted the World Obesity Federation as saying that sugary drinks are only one of nine major causes of the disease. Such a tax is easy to avoid, making consumers pick alternatives.

Meanwhile, obesity in Vietnam is not a concerning issue, with the rate going up from 2.1% to 3.6% of the population in 2016-2024, among the lowest in the world, he added. Luc pointed out the growth rate of obese people was higher, at 5.7% a year for people under five years old and 8.4% for people between five and 19 years old. The effectiveness of the excise tax on such age groups is questionable, he argued.

Nguyen Thi Lam, former vice head of the National Institute of Nutrition under the Ministry of Health, stressed the excise tax does not fully solve the obesity issue. She noted that in Vietnam, obesity is more prevalent among kids and less popular among adults, in comparison with the world.

Another paradox is that obesity is more prevalent among urban kids, who consume fewer sugary drinks, and less among rural kids, who consume more sugary drinks, Lam said.

As a result, to solve obesity, an excise tax against sugar drinks is not feasible, she stressed.

On the same page, Phan Minh Thuy, a representative of the Vietnam Chamber of Commerce and Industry (VCCI), said the Ministry of Finance’s target of reducing obesity by applying an excise tax needs considering. The ministry should study more about the impacts related to consumers’ behaviors, smuggled products, and business hardships.

Huong Vu, vice head of the VAFIE's companies supporting board and a tax expert, said it is likely that the Ministry of Finance is focusing more on consumers’ health and skipping the tax revenue related to this tax. "If so, the ministry should consult more with the Ministry of Health for scientific research on the impacts."