The industry, which uses 300,000 workers, is facing difficulties.

A survey conducted by the Central Institute of Economic Management (CIEM) found that half of enterprises in the beverage industry saw turnover and profits fall in 2020 and 2021 because of the pandemic.

More than 79 percent of enterprises have applied measures to reduce operation costs, and more than 58 percent have postponed plans to scale up production and have cut their workforce.

The enterprises in the industry have had to cut 4-7 percent of workforce, while the average income of workers has decreased by 7-10 percent compared with the pre-pandemic period.

Nguyen Van Viet, Chair of the Association of Beer, Wine and Beverages (VBA), said that beverage output has dropped by 20-30 percent over the last two years, while revenue has decreased by 16 percent compared with 2019. Meanwhile, beer output has decreased by 1 billion liters.

The situation was expected to be better this year when anti-pandemic measures were lifted, and tourism and food services resumed. However, the industry still has not seen improvement because input material prices are at high levels.

Malt, an important material, has increased by 50 percent in price, and Humulus lupulus and sugar by 15-20 percent, while other materials are up by 10 percent. Cans have increased by 15-30 percent, bottle caps by 30-35 percent, and fuel prices and transportation costs by 20 percent.

While everything is increasing in price, from fuel, transport costs, materials and pay for workers, beverage companies cannot raise the selling prices because of weak demand.

Meanwhile, under the tax system reform strategy by 2030 which was submitted to the Government on April 23 for approval, state management agencies will build a roadmap on raising luxury tax on tobacco, beer and alcohol.

According to Ngo Tri Long, a respected expert, Vietnam has four times adjusted the luxury tax on beer and alcohol. The current luxury tax rates are 65 percent for beer and 35-65 percent for alcohol, depending on alcohol levels. Tax is calculated by value, i.e the percentage tax of selling prices.

The problem is that the state can only collect tax from alcoholic drinks in the official sector, while it fails to collect tax from unofficial sector. Analysts warned that the tax increase in alcoholic drinks may encourage unofficial products and smuggling.

According to Long, Vietnam needs to change the way of taxation. Instead of imposing tax based on the value of products, it would be better to tax based on alcohol levels. The mechanism is being applied in many countries in the world.

Tran Thuy