Finance Ministry stands firm on sugary drink tax

In a bill that is being reviewed by the Ministry of Justice, the finance ministry has however amended the term “sugary drinks” into “sugary beverage under Vietnamese standards” after consulting with businesses.

This excludes drinks that contain dairy, nectars and nutritious drinks from the purview of the tax.

Carbonated drinks and tea, coffee, fruit juices, and sports drinks will be subject to the tax.

The tax rate has yet to be determined.

After the ministry revived the sugary drink tax proposal this year, businesses and association have voiced opposition to it, saying it will not reduce obesity and will also cause difficulties for related industries such as sugar, package manufacturing and retail.

But the ministry dismissed the argument saying taxes on sugary drinks are a global phenomenon, and the World Health Organization encourages governments to impose them to curb their consumption.

Around 85 countries have such a tax, six times the number 10 years ago, it said.

In Mexico, people have reduced their spending on sugary drinks by 12% within two years of imposing the tax.

In Southeast Asia, six out of 10 countries (Thailand, the Philippines, Malaysia, Laos, Cambodia, and Myanmar) have imposed the tax.

The ministry also sought to bring drinks made from barley and non-alcoholic drinks under the tax’s scope, saying their production process is similar to that of beer.

But businesses oppose the rationale, saying similarities in the production process do not make them unhealthy drinks.

In the past the ministry proposed taxing sugary drinks in 2014, suggesting a 10% rate, but many government agencies rejected it.