Gov't proposes halving fuel taxes to ease price pressure

Gov't proposes halving fuel taxes to ease price pressure

Under a draft resolution of the National Assembly’s Standing Committee, the taxes on gasoline (excluding ethanol-blended fuel) and diesel are proposed to be halved to VNĐ1,000 and VNĐ500 per litre, respectively. The tax on jet fuel is proposed to be reduced by VNĐ50 to VNĐ1,000 per litre.

A petrol station in Hưng Yên Province. The Ministry of Finance has proposed cutting the environmental protection tax on gasoline and diesel by 50 per cent in a move that could lower domestic fuel prices by more than VNĐ1,000 (US$0.038) per litre. — VNA/VNS Photo Thế Duyệt

The Ministry of Finance has proposed cutting the environmental protection tax on gasoline and diesel by 50 per cent, a move that could lower domestic fuel prices by more than VNĐ1,000 (US$0.038) per litre amid global energy shocks linked to tensions in the Middle East.

Under a draft resolution of the National Assembly’s Standing Committee, the taxes on gasoline (excluding ethanol-blended fuel) and diesel are proposed to be halved to VNĐ1,000 and VNĐ500 per litre respectively. The tax on jet fuel would be reduced by VNĐ50 to VNĐ1,000 per litre.

If approved, retail fuel prices could decline correspondingly, by VNĐ1,080 per litre for gasoline and VNĐ540 for diesel and jet fuel after accounting for value added tax.

The proposal comes as global refined fuel prices have risen sharply amid geopolitical tensions. Domestically, the price of RON 95 gasoline has climbed above VNĐ30,000 per litre, weighing on production, business activity and consumption.

The tax adjustment is an urgent fiscal measure aimed at curbing price pressures, controlling inflation and supporting economic recovery, the ministry said. Earlier, the government also cut the import tariff on petroleum products to zero.

The reduction, if adopted, is expected to remain in effect until June 30 and is estimated to reduce state budget revenue by around VNĐ1.79 trillion per month. The ministry said the measure is necessary to support the economy while the shortfall could be offset by strengthening tax administration, preventing revenue losses, cutting non-essential spending and additional revenue from crude oil exports.

Currently, the environmental protection tax accounts for about 6.7 per cent of the base fuel price structure. Under the latest domestic price adjustment, RON 95-III gasoline is priced at VNĐ30,690 per litre and diesel at VNĐ33,420 per litre, up 52 per cent and 73 per cent respectively compared with late February, before the Middle East conflict escalated. 

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