Propose 4 solutions for applying excise tax of sweetened beverage

Consuming more sweetened beverage affect seriously to consumers’ health.

Sweetened beverage misuse causes serious consequences for health

On 22/6, the Preventive Medicine Department of the Ministry of Health held a workshop to announce recommendations of the World Health Organization on sweetened beverage consumption control in order to prevent non-communicable diseases.

Mr. Truong Dinh Bac, Deputy Director of the Preventive Medicine Department of the Ministry of Health, said that Vietnam currently consumes about 46.5 grams of free radical sugar per day, almost equal to the maximum limit 50g / day) and nearly double the consumption level of less than 25g /day as recommended by the World Health Organization. Surveys on household living standards in Vietnam, showed that 62.86% of households have consumed sweetened beverage.

Warning about the diet of consuming high alcoholic beverage, Mr. Bac stressed that the consumption of sweetened beverage is increasing, especially in developing countries. Sweetened beverages produced on an industrial scale are increasing with various type of products and are popular for children. Consumption of sweetened beverage has increased drastically by 7 times in the last 15 years.

According to representatives of the National Institute of Nutrition, sweetened beverage can bring a sense of delicious refreshment, making a person want to consume more fried and grilled food. There are many reports illustrating that using sweetened beverage causes excess energy that results in fat accumulation, metabolic disorders, risk for non-communicable diseases such as being overweight, obesity, hypertension, osteoporosis. A more serious risk is that it causes bad consequences such cardiovascular disease, the leading cause of death today, accounting for 33/73% of deaths every year.

According to a survey of overweight and obesity in Vietnam by the National Institute of Nutrition, 16% of adult men and 20% of adult women are overweight or obese; In addition, 11.7% of male children and 7.6% of girls between the ages of 5 and 19 are overweight.

Applying excise tax to limit consumption

In order to limit the bad consequences to consumers’ health, according to Mr.Truong Dinh Bac, the World Health Organization recommends that the amount of sugar in each person's diet should be no more than 10%, and it should be reduced to less than 5%, enough energy for one day to get the additional benefits of a healthy lifestyle.

To limit the consumption of sweetened beverages, businesses need to label products to warn it can be harmful to the health of consumers. In addition, there needs to be excise tax imposed on sweetened beverages to limit consumption due to higher prices; Also restrict the advertisements of sweetened beverages. In addition, limit sweetened beverages, people need to increase the use of healthy foods like vegetables and fruits.

To better analyze the effectiveness of imposing excise tax on sweetened beverage, Prof. Guillermo Paraje, short-term consultant of the World Health Organization, said that ‘currently Vietnam doesn’t have excise tax to impose on sweetened beverages, it is only affected by Value Added Tax (VAT) of 10%’ .

Therefore, Prof. Guillermo Paraje offers four options for imposing excise tax on sweetened beverage.

Option 1, is impose a tax of 3,500 VND / liter of sweetened beverage. Accordingly, prices will increase from 14% (juice) to 23% (if available in tea and coffee). With tax, the consumption of these products will decrease about 864 million liters, the amount collected will be about 12,090 billion VND.

Option 2, is impose 35 dong per gram of sugar in 100ml. Then the price will increase to about 10% (fruit juice and sports water) to 25% (energy drink); The consumption will decrease by 880 million liters; Taxes will be about 12,400 billion VND.

Option 3, is impose 40% of finished price; retail prices will rise by about 20%; the consumption will decrease 863 million liters; The tax collected would be 12,400 billion VND.

Option 4, is impose 10% tax on finished price, the consumption price will increase about 5%; consumption will decrease by 216 liters; Taxes collected will be about 3,690 billion VND.

Explaining these proposals, Prof. Guillermo Paraje, the first option will reduce the impact of large quantities of sweetened beverage, discourage consumption of sugar beverages, and consumption of sweetened beverage in smaller packages; The second option is to directly reduce the sugar content of a beverage, thereby giving the ability to quit consuming, reducing or replacing sugar beverage with low or sugar free.

"The other two options are intended to affect the consumption of sugar beverage in general but aim to target on higher priced beverages." Prof. Guillermo Paraje said.