This Country Is Considering Implementing a Strict Tax Hike to Curb Alcohol Consumption

Vietnam is implementing an alcohol tax that will increase to 100% by 2030. (Photo: AP Photo/Robert F. Bukaty)

Food Navigator Asia reported on Monday that the Vietnamese government has finished drafting regulations for an alcohol tax increase of up to 100% by 2030 as part of a tactic to discourage overconsumption of alcohol amongst consumers.

The tax hike was proposed in June, according to Reuters, and it appears the country is moving forward with it to curb alcohol consumption.

The government additionally aims to impose a tax on tobacco products and incorporate a 10% tax on sugary beverages.

This marks a sharp deviation from the norm in Vietnam, as the country has a reputation for selling beers at a cost of less than $1 in the United States, according to the outlet.

“Higher taxation is necessary in order to reduce the consumption of alcohol in Vietnam,” the country’s Ministry of Finance said in a statement. “The current tax law levies an excise tax of 65% on liquors with 20% ABV and above; 35% for drinks below 20% ABV and 65% for beers — these would be increased to 80%, 50% and 80% respectively under the new regulations in the short term by 2026.”

The taxes will eventually jump up to 100% for liquor and beer and 70% for lower-ABV drinks.

Vietnamese officials shared that the move was in alignment with what the World Health Organization recommended for driving up alcohol costs by 10%.

The outlet shared that inflation will also impose an additional 2% hike.

As for sugary drinks, the Ministry of Finance explained its reasoning for the move in the following statement:

“The annual consumption of sugar-sweetened beverages in Vietnam has grown by 1.5 times in seven years to hit 70.5 liters in 2020, and our percentage of overweight and obese children and teens has also doubled to 19%, well over the average in the ASEAN region which is 17.3%.”

Food Navigator Asia reported that the taxes could bring the equivalent of $94 million to the government’s budget before customers shift their preferences to cheaper boozy beverages.

Yet, it’s possible that in the long term the move could adversely affect Vietnam’s struggling beer industry. In 2023, beer consumption plummeted by 23%, according to the outlet.

Heineken shut down one of its Vietnamese breweries in June due to the difficult landscape.

The brewery shared that recent legislation involving the country’s drinking and driving laws may have been partially to blame for a lack of demand. Vietnam passed a law in 2019 making it illegal for drivers to have a blood alcohol content over 0, which makes drinking less practical in many situations.

Regardless, it’s clear the beer landscape within the country is changing and only time will tell how the new taxes will affect consumer behavior.

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