Ministry of Finance proposes to raise environmental petrol tax
In January, the Ministry of Finance proposed to raise the environmental tax on petrol from VND1,000-4,000 to VND3,000-8,000 per litre. According to the Ministry of Finance, raising the taxes will help improve awareness about the environment and prevent pollution.The increase in environmental tax would help make up the shortfall in tax income Vietnam has committed itself to in trade agreements with ASEAN countries. Finally, increasing local petrol prices to the same levels as neighbouring countries would help reduce smuggling.
The National Assembly Standing Committee will decide the most suitable rate for each period.
Ngo Tri Long, former head of the Institute for Market and Price Research, then raised concerns about the transparency in the usage of environmental tax. "VND3,000 is an already high rate. It accounts for 40% of the price. Raising the environmental tax from VND3,000 to VND8,000 (USD35 US cents) will be a huge shock," he said.
Le Dang Doanh, former head of the Central Institute for Economic Management, also said it would cause transport and input costs to rise.
On February 6, during a meeting about the draft law on environmental tax of the Ministry of Finance, the Ministry of Justice, the Ministry of Foreign Affairs and the Vietnam Chamber of Commerce and Industry (VCCI) have voiced their scepticism about the increase.
The Ministry of Foreign Affairs suggested that the Ministry of Finance should carefully consider the necessity of the hike and how they will implement it while many firms are still having difficulties. It also suggested making a socio-economic impact assessment.
The Ministry of Justice said the draft law was too simple and asked the Ministry of Finance to carefully consider the impact on daily life. The reports by the Ministry of Finance haven't been able to highlight the policy's content and were not specific enough.
A VCCI representative also raised concerns as local economy might be badly affected if environmental taxes were raised to offset the losses from trade agreements with other countries.