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Luxury taxation on carbonated soft drinks not applauded by customers: surveys

2014-05-13 15:09:14

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Vietnamese consumers believe that fizzy soft drink manufacturers will raise their selling prices if the government imposes a luxury tax on the products. This means that the taxation would put a heavier burden on their scanty budgets.
Thoi bao Kinh te Vietnam has quoted its sources as saying that the selling prices of carbonated soft drinks may increase by 10 percent if the Ministry of Finance’s tentative taxation plan become reality.
Not only carbonated soft drink manufacturers, but Vietnamese consumers have also lodged their protest against the taxation plan.
A survey conducted by Epinion, a Danish market survey firm, on expected Vietnamese consumption behaviors in case the soft drink prices increase, has found that the majority of consumers would give up soft drinks and shift to use other alternatives.
Epinion, in its survey, polled 600 consumers between the ages of 15 and 49, who live in the Hanoiand HCM City areas. 43 percent of the polled consumers reportedly have monthly incomes of under VND7.5 million. 80 percent of those polled said they had consumed carbonated drinks within the last three months.
Sixty percent of those surveyed believed that the taxation would have an impact on the entire drink industry, because the taxation would lead to a decrease in the demand for drinks.
74 percent of interviewed people believe that low income earners would suffer most from the taxation. Meanwhile, middle-class and high income earners would not be hurt by the taxation and price increase, because the 10 percent price increase is negligible if compared with their high incomes.
“I am an employee and I earn just enough to live. Carbonated soft drinks are the things I usually use in summer. Therefore, we will suffer from the taxation,” said Tran The Dung in Dong Da District in Hanoi.
And 74 percent of those surveyed said it is foreseeable that the taxation will not only make consumers suffer, but it will also deal a strong blow to grocery stores, vendors and street shops.
The owner of a street tea shop on Thai Ha Street in Hanoi said a carbonated product is now sold at VND7,000-10,000, and it would become unaffordable if its price were to rise to VND10,000-13,000.
“Low income earners, the major consumers of carbonated soft drinks, may choose other drinks, because an increase of VND3,000 would be big enough to push them in that direction,” she said.
While consumers remain indifferent to the forecast price increases of wine, tobacco or other luxurious products, they have expressed big worries about the possible price increases of soft drinks – a popular product for people.
73 percent of consumers said they would shift to energy drinks, tea, canned milk and fruit juice instead. Only 27 percent said they would be loyal to carbonated soft drinks, despite the price increases.
That being the case, scientists have warned that the majority of the alternative products have sugar content equal to or even higher than that of carbonated soft drinks.
Source: TBKTVN