Vietnam ministry insists on exorbitant ‘environmental protection’ tax on fuel
Vietnam ministry insists on exorbitant ‘environmental protection’ tax on fuel
Vietnam’s Ministry of Finance has reaffirmed its stance that the ‘environmental protection’ tax on fuel should be capped at VND8,000 a liter, apparently turning a deaf ear to local experts and members of the public.
The VND8,000 a liter ceiling has been vehemently slammed shortly after the ministry announced the first draft of a new law on the environmental protection tax in January.
In the third amendment to the bill announced earlier this week, the ministry sparked fresh outrage when it maintained the proposed high tax ceiling.
According to the draft, the band for the environmental protection tax on petrol should be widened from VND1,000-3,000 a liter to VND4,000-8,000 a liter, starting July 2018.
The proposed maximum tax for oil products is VND4,000.
The current environmental protection rate for petrol is VND3,000 a liter.
According to the finance ministry, the environmental protection tax will contribute to the state budget, allowing the government to allocate more money to different programs to resolve environment-related problems caused by fuel users.
If the highest rate is applied, the tax will contribute some VND102 trillion (US$4.49 billion) annually to the state coffers, according to the Vietnam Petroleum Association.
This amount is huge, accounting for nearly ten percent of Vietnam’s state revenue, which topped $50 billion in 2016.
With the current retail price revolving around VND17,000 a liter, the new environmental tax, once in place, will make up nearly 50 percent of petrol rates in Vietnam.
As of Wednesday, A95 petrol sells at VND17,200 ($0.76) a liter in Vietnam, compared to $0.44 a liter in Malaysia and $1.97 a liter in Singapore.
Even when the import duty on fuel remains unchanged, the VND8,000 a liter tax will send retail price to VND22,000 a liter, according to Nguyen Van Tiu, general director of the Tu Luc 1 fuel firm in Hanoi.
“This will leave members of the public in shock,” he said.
The draft is scheduled to be submitted to the lawmaking National Assembly for approval in October. If ratified, the new tax band will be effective from July 2018.
