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Proposal to Increase Special Consumption Tax on Health and Environment-Related Goods

(News Portal – Dong Nai) - The Ministry of Finance is drafting the Special Consumption Tax (SCT) Law and seeking public comments on amendments related to SCT on goods and services. These changes will introduce a tax increase roadmap from 2026 to 2030, covering items such as tobacco, alcohol, cars, gasoline, soft drinks, and services like nightclubs, karaoke, and prize-based electronic games.

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Many consumer goods are proposed for tax adjustments to limit public consumption. 

The SCT accounts for 8-9% of the annual total state budget revenue across the country. After 16 years of implementation (since 2009) and four amendments, the SCT policy has revealed certain limitations and shortcomings that need to be addressed to adapt to the current phase. According to the Ministry of Finance, the draft SCT Law aims to refine the tax policy to expand the tax base. The law will ensure transparency, simplicity, and ease of implementation while enhancing the capacity and efficiency of tax management, preventing tax evasion, loss, and arrears, and ensuring accurate and full tax collection for the state budget, thus stabilizing state revenue sources.

At a recent workshop on public consultation for the revised SCT Law in Can Tho, Mr. Truong Ba Tuan, Deputy Director of the Department of the Tax policies, fees and charges Supervisory Authority (Ministry of Finance), acknowledged that while the SCT Law has achieved many successes, a review of SCT policies in countries like China and Thailand shows that recent global trends favor expanding the tax base to reduce consumption of goods harmful to public health, children, and the environment. Some countries have also introduced new goods and services subject to SCT (such as sugary beverages). Consequently, this is an appropriate time for Viet Nam to adjust its SCT policies.

According to statistics from the Ministry of Finance, if the proposed SCT increase is implemented to reduce consumption of harmful goods, it could decrease tobacco and alcohol consumption by up to 8%, and sugary beverage consumption by at least 8%. This aligns with the implementation of the World Health Organization's Framework Convention on Tobacco Control, where tobacco taxation is seen as an optimal solution for tobacco harm prevention.

In Dong Nai, the projected budget revenue from SCT for 2024 is 55 billion VND. Although this figure is relatively small compared to the province's total state budget revenue, Dong Nai is an industrial hub that attracts millions of residents from across the country for work and living. This has led to a high demand for goods and services, particularly those related to health. Therefore, a proposed tax increase on health-harmful goods such as tobacco, sugary drinks, and confectionery will directly affect consumer spending, reduce consumption, and improve public health.

According to market researchers and SCT policy experts, increasing SCT not only helps regulate the consumption of products harmful to health and the environment but also contributes to improving public health, enhancing labor productivity, and fostering sustainable development. Moreover, it will significantly boost state budget revenues.​

The Ministry of Finance's proposal for SCT reform also aims to create a unified and consistent legal environment for the economy, addressing the limitations and inadequacies of the current SCT Law. This ensures harmony and coherence between laws such as the Customs Law of 2014, the Export and Import Tax Law of 2016, the Law on Tobacco Harm Prevention of 2012, and the Law on Prevention and Control of Harmful Effects of Alcoholic Beverages of 2019. 

Author: Nam Huu

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