Customers purchase petrol at a station in Hanoi (Illustrative image. Source: VNA)
Hanoi (VNA) - The Ministry of Finance (MoF) is going ahead with its plan to increase environmental protection tax on petroleum from the current 1,000-4,000 VND to 3,000-8,000 VND per litre, despite objections from other ministries and the public.

In its second draft of the Law on Environmental Protection Taxes announced last week, the ministry proposed a tax hike on fuel consumption of 3,000-6,000 VND per litre for aviation fuel, 1,500-4,000 VND per litre for diesel, 300-2,000 VND per litre for kerosene, and 900-4,000 VND per kg for mazut.

If the new tax rate is applied, the price of gasoline at the pumps will rise to around 22,000 VND (roughly 1 USD) per litre from the average price at the pump of around 16,000-17,000 VND for petrol and 10,000-11,000 VND for diesel and mazut, respectively, analysts said.

The Ministry of Transport (MoT) told the Ministry of Finance (MoF) that Vietnam would apply two petroleum quality standards based on the Euro 2 and Euro 4 emission standards, suggesting that the MoF set a lower environmental protection tax for Euro 4, which cleans emissions from diesel cars, to encourage the production of more eco-friendly petroleum.

The Vietnam National Petroleum Group (Petrolimex) said the calculation of environmental protection tax on fuel should encourage E5 bio-fuel consumption.

The Vietnam Petroleum Association (VINPA) has supported the MoF’s tax proposal, though it has pointed out that the maximum tax of 8,000 VND per litre is too high.

The VINPA has suggested that the MoF hike environmental protection tax from the current 3,000-5,000 VND per litre for petrol; from 1,500-3,000 VND per litre for diesel; from 3,000-5,000 VND per litre for aviation fuel; and from 900-3,000 VND per kg for mazut.

Earlier, the Ministry of Foreign Affairs said the MoF should carefully consider its tax hike proposal as local businesses, which are already paying many kinds of taxes and fees, will be further hit. It asked the MoF to do an assessment on the impact of the tax hike on the economy and people’s lives.

The draft law is scheduled to be submitted to the Finance-State Budget Committee of the National Assembly (NA) for consideration this month. It will be submitted to the NA Standing Committee in August and to NA deputies in September. The NA will review the draft law for approval in October.

MoF’s deputy minister Tran Xuan Ha said the tax hike is one of the measures to better manage petroleum products while limiting smuggling. Its impact on businesses, people and inflation will be calculated, he added.

Last year, around 42.3 trillion VND (1.9 billion USD) was collected in environmental protection tax, of which petroleum raked in 40.2 trillion VND.-VNA