Steeper tax cut proposed for petrol products in Vietnam
Steeper tax cut proposed for petrol products in Vietnam
The move is essential against potential shocks on the national economy, especially the impacts from the Ukraine-Russia conflict and declining production capacity from OPEC that are resulted in skyrocketing fuel and gas prices on the global market.
The Ministry of Finance (MoT) proposed a cut of VND1,000 per liter in environmental protection tax for fuel and petrol products, but there have been opinions calling for a steeper reduction to further relieve pressure on the people and businesses.
A lower environmental protection tax rate would help keep prices of petroleum products from further rising. Photo: Hai Linh |
Under the draft proposal, a reduction of VND1,000 would result in a decline of environmental protection tax for fuel and petrol products from VND4,000 to VND3,000 per liter, and another cut of VND500 for diesel, making the tax from VND2,000 to VND1,500.
The environmental protection tax is an indirect tax, levied on products and goods causing negative environmental impacts.
As the tax is incorporated into the final product prices, a lower environmental protection tax would help reduce the retail price of petrol and fuel products by VND1,100 per liter, and diesel by VND550.
Economist and National Assembly Deputy Tran Hoang Ngan suggested the move is essential against potential shocks on the national economy as a whole, especially the impacts from the Ukraine-Russia conflict and declining production capacity from OPEC, that are resulting in skyrocketing fuel and gas prices on the global market.
Phuong Linh Trading & Electromechanical Manufacturing, which specialized in manufacturing fans and blowers, are among those that are struggling to cope with the rising prices of fuel products.
According to the Director of Phuong Linh Company Tran Van Le, higher transportation costs would directly impact the prices of input materials.
“ The Government should better mobilize the petrol price stabilization fund to continue lowering the environmental protection tax,” Le said.
The view was reflected in a document sent from the Vietnam Chamber of Commerce and Industry (VCCI) to the MoF, which suggested a steeper tax cut for this kind of strategic commodity.
“A tax cut at this moment would keep prices of fuel and gas products from rising, as fuel remains a key factor in businesses’ operation,” stated the VCCI.
The VCCI added petrol prices have now reached a record high and are set to be on the upward trend, due to the escalating tension in Europe and economic sanctions being imposed.
In addition, the VCCI suggested a tax cut is feasible given Vietnam is among the beneficiaries of rising crude oil prices and positive state budget revenue in the first two months of 2022.
“This put the Government in a position to take a larger tax cut on this commodity, for example, a reduction of VND2,000 per liter for fuels, and VND1,000 for diesel,” said the VCCI, but adding the tax cut period may be shorter, from three to six months, rather than until the year-end as indicated in MoF’s proposal.
The MoF calculated the cut would mean a forego of VND14.5 trillion ($645 million) in revenue for the state budget.
| Without an intervention from the Government, prices of petrol products would continue rising with inevitable consequences for other basic commodities. This no doubt would put more difficulties on businesses and people that have been facing severe economic impacts from the pandemic, Economist Tran Hoang Ngan said. |
