Special consumption tax should be abolished for petrol, air conditioners: NA deputies

Special consumption tax should be abolished for petrol, air conditioners: NA deputies

Some NA deputies believe petrol and air conditioners should be considered essential products and not subject to special consumption tax.

A petrol station in Hà Nội. A National Assembly deputy says petrol is an essential product that is used by everyone in Việt Nam. — VNA/VNS Photo Trần Việt

The special consumption tax should be lifted for petrol and air conditioners since they are not luxury products, according to some National Assembly (NA) deputies. 

Regarding the revision of the draft amended Law on Special Consumption Tax, Lê Thị Nga, Permanent Deputy Chair of the NA’s Committee for Judicial Affairs, said that the tax is intended for luxury goods and items discouraged for consumption. However, in Việt Nam, petrol is an essential commodity.

"Imposing a special consumption tax on an essential product of the people is not in line with the tax’s purpose," she said.

Commenting on the draft, Nga pointed out that it doesn’t provide any explanation that can justify the need to continue imposing special consumption tax on petrol.

The drafting agency needs to review this point, otherwise the tax should be abolished for this product, she said.

Nga held the same opinion for air conditioners. They were considered ‘luxury items’ 10 years ago, but now they are not, she said.

"We propose abolishing the special consumption tax for petrol and air conditioners with normal capacity,” Nga said. “If the tax is not abolished, then there needs to be a clear explanation as to why such essential goods are included in the list of items subject to this tax."

Hoàng Thanh Tùng, chair of the NA’s Committee on Legal Affairs, had the same opinion.

“Petrol is an essential product and a key product of the economy that is used by everyone. So it is not truly a luxury product to be taxed with a special consumption tax, especially when it is already subject to an environmental protection tax,” he said.

The imposition of the tax on air conditioners should also be reconsidered, he added, which was an issue that had been discussed over and over at the eighth meeting of the NA last year.

A petrol station in Hà Nội. A National Assembly deputy says petrol is an essential product that is used by everyone in Việt Nam. — VNA/VNS Photo Trần Việt

In response to the NA deputies’ opinions, Deputy Minister of Finance Cao Anh Tuấn explained the Government’s viewpoint to continue imposing the special consumption tax on both items.

In recent years, the demand for refrigeration equipment and air conditioners in Việt Nam has increased significantly, according to Tuấn.

While some air conditioners have adopted technology to reduce the use of refrigerants that are harmful to the environment, they still use substances that deplete the ozone layer and contribute to global warming.

On June 11 last year, the Prime Minister issued Decision 496 to approve a national plan to manage and eliminate ozone-depleting substances and hydrofluorocarbons (HFCs), which are synthetic chemicals used in cooling and refrigeration, the official added.

Globally, countries like South Korea, India and Norway do impose special consumption taxes on HFCs in air conditioners.

Europe has limited the use of air conditioners to conserve energy. Spain bans air conditioners from being set below 27 degrees Celsius, the UK requires permits for air conditioner installation and energy efficiency checks and Switzerland has a complicated permitting process for the item, Tuấn said.

"It is necessary to continue imposing the special consumption tax on air conditioners with capacities of up to 90,000 BTU to raise awareness on environmental protection and reduce electricity consumption," he said.

As for petrol, Tuấn proposed that the tax continue to be imposed, but at a lower rate on biofuels, similar to what has been done in several countries.

Popular biofuels in Việt Nam are E5 and E10, which are typically a mixture of RON92 petrol (95-90 per cent) and biofuels (5-10 per cent).

Việt Nam has been taxing petrol since 1995, and the tax has remained stable for over 20 years, according to Tuấn.

"The current law imposes an 8 per cent tax on E5 and a 7 per cent tax on E10, which is lower than the tax on regular petrol and encourages the use of environmentally friendly biofuels,” he said.

“Since we have been collecting this tax steadily, there shouldn’t be a reason to abolish it.” 

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