Vietnam: World Bank Urges Alcohol Tax Hike
Amidst public debate about plans to increase the value added tax, attention has been paid to the low level of alcohol taxation in Vietnam.
Vietnam’s Minisitry of Finance is looking to raise value added tax (VAT) from the current base level of 10% to 12%, starting from 2019. If the proposal is approved, Vietnam would have the second highest VAT rate in Southeast Asia, trailing the Philippines, where goods and services are taxed at 18%.
The proposed 2-percent tax hike has triggered a heated debate among economists, policymakers and businesses, the VN Express International reports.
Sebastian Eckardt, a senior economist at the World Bank, urged the government to consider imposing a higher special consumption tax on tobacco and alcohol given the low rates in Vietnam, according to VN Express reporting.
Other harmful commodities are already being addressed: Soft drinks are expected to come with a 10% tax by 2019, while packs of 20 cigarettes will have a 75% tax from 2019.
For example, World Health Organization and World Economic Forum write that
Specific intervention strategies can effectively tackle leading causes of Non-communicable Diseases and their underlying risk factors, as a growing body of evidence has demonstrated.
These interventions include population level measures that encourage reduced consumption of tobacco, alcohol and salt; increased excise taxes; and enhanced regulation.”