Proposed Consumption Tax Poses Threat to Beverage and Game Industries

Proposed Consumption Tax Poses Threat to Beverage and Game Industries

According to business representatives, the proposed special consumption tax on sweetened drinks and video game products could have detrimental effects on both industries, potentially reducing companies’ competitiveness. Nguyen Van Viet, the chairman of the Vietnam Association of Beer, Wine, and Beverages, expressed concerns at a forum, stating that the proposed tax on sweetened drinks is unjust as sugary beverages are not the primary cause of obesity in Vietnam. The Ministry of Finance had previously suggested a similar tax in 2019, but it was not approved.

Viet argued that sugary drinks contain an average of 44 kcal per 100 grams, which is relatively low compared to other processed sugary foods. For instance, cookies contain 300-400 kcal per 100 grams, while ice cream has an average of 200 kcal. He further warned that if the tax is implemented, consumers may shift to products with even higher sugar contents. Viet also pointed out that the impact of such a tax on reducing obesity has been low in countries that have implemented it, and Vietnam’s consumption of sugary drinks is relatively low compared to the global average.

The chairman of the association also emphasized that the tax would negatively affect 9,000 small and medium businesses, one million sellers, tens of thousands of workers, and hundreds of thousands of sugarcane farmers in the industry, particularly those still recovering from the pandemic. A report by the Central Institute for Economic Management in 2021 estimated that a 10% tax on sweetened drinks could reduce industry revenues by VND3.8 trillion while only increasing state budget revenues by VND2.72 trillion.

Concerns have also been raised by video game businesses regarding the proposed tax. La Xuan Thang, a representative from online game producer VNG, warned that many companies may resort to “smuggling” their games into the market if the tax is imposed, making it difficult to manage such side effects. The tax would also pose additional challenges to Vietnam’s game industry, which has not received any incentive policies and faces intense competition from foreign businesses. Thang noted that only 15% of the country’s registered game companies are still active, with the rest either shutting down or relocating overseas to benefit from incentive policies.

It is worth mentioning that games have positive aspects, fostering creativity, utilizing advanced technology, and reducing stress, Thang added. He also highlighted that the e-sports category has been recognized as a sport by the International Olympic Committee. Nguyen Trong Nghia, a representative of game producers in Vietnam, mentioned that no country in the world has imposed a special consumption tax on video games, although some have implemented policies to limit playtime or control content, such as South Korea and China.

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