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Impacts of Excise Taxation on Non-Alcoholic Beverage Consumption in Vietnam

Author

Listed:
  • Linh Luong

    (Master Program in Public Policy, VNU Vietnam Japan University, Hanoi 100000, Vietnam)

  • Linh Hoang Vu

    (Master Program in Public Policy, VNU Vietnam Japan University, Hanoi 100000, Vietnam
    Institute of Theoretical and Applied Research, Duy Tan University, Hanoi 100000, Vietnam)

Abstract

Vietnam is faced with the issue of increasing overweight and obesity, particularly among children and adolescents in urban areas. As a result, the government of Vietnam recently introduced a proposal to impose a special consumption tax on sugar-sweetened beverages (SSB) in Vietnam, as the drinks are causing negative health consequences for Vietnamese people. This research is aimed at evaluating the impacts of a 10% special consumption tax on SSB in Vietnam using the Almost Ideal Demand System (AIDS) model. We found that a 10% SSB tax will reduce SSB consumption by 11.4%. Consumers will switch to substitutes, leading to an increase in the consumption of milk by 2.3%, beer by 2.5%, dried tea by 2.2%, and wine by 1.7%. However, in the short run, the tax could lead to a decrease in consumer welfare due to higher SSB prices. In addition to people from better-off households, people from the ethnic majority group, most of which live in urban areas with a large number of children, have a relatively high welfare reduction.

Suggested Citation

  • Linh Luong & Linh Hoang Vu, 2020. "Impacts of Excise Taxation on Non-Alcoholic Beverage Consumption in Vietnam," Sustainability, MDPI, vol. 12(3), pages 1-13, February.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:3:p:1092-:d:316108
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    References listed on IDEAS

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    Cited by:

    1. Lan Nguyen & Hans De Steur, 2021. "Public Acceptability of Policy Interventions to Reduce Sugary Drink Consumption in Urban Vietnam," Sustainability, MDPI, vol. 13(23), pages 1-18, December.
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