Vietnam lawmaker says auto tax cut will kill province’s cash cow
Vietnam lawmaker says auto tax cut will kill province’s cash cow
While Vietnamese consumers are anticipating the zero import duty for passenger car scheduled for 2018, a lawmaker who represents the central province of Quang Nam said the tariff elimination will send one of its cash cows to bankruptcy.
Passenger cars with fewer than 24 seats, 40 percent of whose parts are manufactured by ASEAN countries, will be subject to a zero import duty in 2018, under the Common Effective Preferential Tariff agreement reached by the 10-countries bloc.
The special consumption tax on the vehicles will also be sharply slashed accordingly, which makes Le Van Lai “extremely concerned,” he told a lawmaking National Assembly session in Hanoi on Friday.
Lai represents voters of Quang Nam, where Truong Hai Auto, a leading Vietnamese automaker, runs its car assembly and production complex.
“With the zero tax, businesses like Truong Hai will no longer be able to exist and around 10,000 workers will become unemployed,” Lai said at the meeting aimed to discuss the draft of an amended law on import-export tax.
Without the contribution of the automaker, Quang Nam will lose some 50 percent of its budget revenue and “will be unable to find an alternative source to make up for the loss,” Lai said.
“There will also be many other bad consequences for the society, so we are very worried,” he added.
Other lawmakers also expressed concern that the Vietnamese auto industry will be severely affected if the special consumption tax is slashed too much.
In Vietnam, cars with an engine capacity of more than 3,000 cubic meters are currently subject to a 60 percent special consumption tax.
“The tax should be kept, or only slightly cut, otherwise foreign carmakers will be benefited whereas the Vietnamese ones will be further disadvantaged,” Ho Thi Thuy, a lawmaker from the northern province of Vinh Phuc, said.
Vietnam’s auto industry already has its production cost 20 percent higher than other regional countries so the tax cut will make them less competitive to ASEAN rivals, she elaborated.
Lai, the lawmaker from Quang Nam, thus urged the government to have a detailed report on the impact of the tax elimination to the domestic auto industry so that “solutions can be made to deal with the issue.”
