High tax on dairy products, low tax on beer and liquor

Most experts, when asked about the tax increases for beer, liquor and cigarettes, said they advocate the plan, especially if the government tries to collect more from domestic taxes to increase budget revenue.

The Ministry of Finance’s reports all show a constrained state budget, which has forced the ministry to borrow more money for the government’s spending.

Le Dang Doanh, a renowned economist, who was head of the Central Institute of Economic Management (CIEM), affirmed that raising luxury tax on products is a reasonable decision.  He said the products, which may harm people’s health, are not taxed high enough to discourage the consumption. Meanwhile, essential goods, including dairy products, necessary to people are taxed too highly.  

“It is necessary to raise tax so as to help ease the burden of diseases caused by harmful products,” Doanh said, adding that Vietnam should follow other countries in this issue.

Sweden, for example, imposes very high tax on beer and liquor, and Swedish citizens have to show identity cards when buying the products.

Nguyen Tuan Lam from the WHO (World Health Organization) Office in Vietnam commented that raising luxury tax would be the ‘win-win’ solution for both the government and people.

“The government would be able to collect more money to cover its spending, while people would be able to avoid diseases,” he said, adding that the experience from Thailand and the Philippines shows this would be a right decision.

A lot of non-government organizations including RTCCD (Hanoi Research and Training Center for Community Development), VPHA (Vietnam Public Health Association) and NGO-IC (The Non-governmental Organizations-Information Center) sent official documents to the National Assembly, expressing their support to the plan on raising luxury tax on beer, liquor and cigarettes.

According to Ha Huy Tuan, deputy chair of the National Assembly’s Finance Supervision Council, luxury tax collection is an important contribution to the state budget revenue which makes up 7% of total revenue. 

Meanwhile, the revenue from from beer, liquor and cigarette accounts for 65% of total revenue from luxury tax.

An analyst estimated that with the luxury tax changes, the retail prices of beer, liquor and cigarettes would increase by 2%-7%.

The National Institute of Nutrition (NIN) has repeatedly recommended the strengthening of the use of dairy products. 

According to Dr Le Bach Mai, Vietnamese calcium dietary has been unchanged in the last 30 years at 500-540 mg a day, just 50%-60% of the recommended level. 

Vietnamese dairy product consumption is modest, at 11 liters per head per annum, equal to half of Thai consumption.