As Vietnam grapples with the complexities of public health and economic recovery, the debate over increasing the special consumption tax on alcohol and beer has taken center stage in the National Assembly. On March 26, 2025, during the 7th National Assembly Delegate Conference, delegates engaged in a thorough discussion regarding the draft revised Law on Special Consumption Tax, with opinions sharply divided on the proposed tax increases.
Delegate Hoang Duc Thang from Quang Tri highlighted the consensus among beverage producers in favor of raising the special consumption tax on alcohol and beer. However, he emphasized the need for careful consideration regarding the amount of the increase, the timeline, and potential unintended consequences of such a tax hike. "The beverage industry has faced significant revenue declines due to the Covid-19 pandemic and natural disasters," Thang noted, stressing that businesses are still struggling to recover.
Thang further warned that the government's proposed tax increase methods could inadvertently push consumers toward cheaper alternatives, potentially stimulating illegal production and smuggling activities. This shift could not only lead to decreased tax revenues but also pose serious health risks for consumers. "Increasing taxes on alcohol and beer could have a ripple effect on dozens of input materials and the incomes of millions of people," he cautioned.
In response to these concerns, Thang proposed that the tax increase be implemented gradually, allowing businesses and consumers time to adapt to the new tax structure. He suggested following the first plan outlined in the draft law, which would facilitate a smoother transition for the market.
Delegate Hoang Van Cuong from Hanoi echoed the sentiment that the primary goal of the special consumption tax is to alter consumer behavior by discouraging the use of harmful products. However, he questioned the efficacy of the proposed incremental tax increases, which would see a 5% rise each year from 2026 to 2030. Cuong argued that such a gradual approach might not significantly change consumption patterns. "If we only raise prices slightly each year, consumers will likely continue their habits without much change," he stated.
Cuong suggested a more aggressive approach, advocating for substantial initial increases followed by fewer adjustments over time. He argued that previous tax hikes had minimal impacts on consumption levels, citing data showing that a 65% increase in retail cigarette prices only resulted in a 4% reduction in consumption. "We need to consider more effective measures to drive behavioral change, such as educational campaigns alongside tax increases," he explained.
The proposed tax changes have sparked a wider discussion among delegates about the implications for various sectors. Cuong pointed out that increasing taxes on beer could directly impact service consumption and, in turn, national income. With the government planning to reduce the value-added tax (VAT) by 2% in 2025 to stimulate consumption, the proposed tax increase on beer in 2026 could create conflicting economic signals.
In light of these concerns, Cuong recommended postponing the tax increase on beer until 2027, allowing for a year dedicated to public awareness campaigns aimed at changing consumer behavior.
Deputy National Assembly Chairman Nguyen Duc Hai acknowledged the diverse opinions expressed during the discussions, particularly regarding the roadmap and tax rates for alcohol, beer, cigarettes, and sugary drinks. He underscored the importance of developing a suitable timeline for tax increases that balances the interests of public health, economic stability, and business viability.
Many delegates expressed the need for a careful approach, with some advocating for a slower tax increase to avoid jeopardizing business operations and economic growth. The Economic and Financial Committee noted that while there is a consensus on increasing taxes, the specifics of the implementation require thorough analysis and consideration.
Some health organizations have urged lawmakers to adopt a more proactive tax strategy, arguing that higher taxes on harmful products like alcohol and tobacco could effectively reduce consumption. They advocate for swift implementation of tax increases to ensure that the costs are reflected in retail prices, thereby influencing consumer choices.
The draft revised law, which encompasses four chapters and twelve articles, is expected to be presented for approval at the upcoming National Assembly session. As discussions continue, the balance between public health initiatives and economic considerations remains a central theme.
Ultimately, the debate surrounding the special consumption tax on alcohol and beer reflects broader societal concerns about health, economic recovery, and the role of government in regulating consumption behaviors. With stakeholders from various sectors weighing in, the outcome of this legislative process will likely have lasting implications for both public health and the economy in Vietnam.
