The Vietnam National Oil and Gas Group (PVN) loads petrol and oil at Dinh Vu Port in northern Hai Phong city (Photo: VNA) Hanoi (VNA) — The FinanceMinistry (MoF)’s proposal to almost triple the environmental protection tax on oil and gas consumption would reduce businesses’ competitiveness againstforeign firms, according to the Vietnam Chamber of Commerce and Industry(VCCI).
VCCI senttheir comments on draft amendments and supplements to the environmentalprotection law to the ministry expressing concerns on the proposed tax hike.
Theministry proposed an environment tax of 4,000-8,000 VND per litre of gasoline(compared to the current 1,000-4,000 VND), 3,000-6,000 VND per litre of aviationfuel, 1,500-4,000 VND per litre of diesel oil, 300-2,000 VND per litre ofkerosene, and 900-4,000 VND per kilogramme of mazut.
VCCIsaid environmental protection taxes were not related to socio-economicdevelopment policies and should not be adjusted based on the policies.
Dau AnhTuan, head of VCCI’s Legal Division said petroleum was an essential good. Ifthe ministry’s proposal aimed to limit the environmental effects by reducingpetroleum consumption, it would not be very effective.
VCCIpointed out that the proposed environment tax hike would hurt enterprises andthe economy. It said fuels are an important input for the transport,agriculture and seafood sectors.
Statisticsfrom the ministry’s Price Management Agency showed that fuels make up 25-45 percent of costs of vehicles and 39.5 percent of costs of airlines. Fuels accountfor 33-59 percent of production cost in the seafood sector and transport makesup 35-40 percent of farming costs.
It alsosaid the tax hike, which aimed to increase collection to the Statebudget, would have a negative impact on the economy as a whole. The taxcut under commitments of trade agreements would benefit both local and foreignfirms.
If thetax hike proposal is approved, Vietnamese companies will lose theircompetitiveness.
VCCIcalled for a comprehensive and objective assessment of the impact of anenvironment tax increase for fuels on the economy and social welfare.
Theministry reported environment tax revenue accounted for 4.1 percent of totalbudget collections last year and 99 percent of it came from fuels. VCCIcalculated the percentage will rise to 9.8 percent if import, specialconsumption and value-added taxes were included.
VCCIpointed out that the proposed environment tax hike would hurt enterprises andthe economy. It said fuels are an important input for the transport,agriculture and seafood sectors.
Statisticsfrom the ministry’s Price Management Agency showed that fuels make up 25-45 percent of costs of vehicles and 39.5 percent of costs of airlines. Fuels accountfor 33-59 percent of production cost in the seafood sector and transport makesup 35-40 percent of farming costs.
It alsosaid the tax hike, which aimed to increase collection to the Statebudget, would have a negative impact on the economy as a whole. The taxcut under commitments of trade agreements would benefit both local and foreignfirms.
If thetax hike proposal is approved, Vietnamese companies will lose theircompetitiveness.
VCCIcalled for a comprehensive and objective assessment of the impact of anenvironment tax increase for fuels on the economy and social welfare.
Theministry reported environment tax revenue accounted for 4.1 percent of totalbudget collections last year and 99 percent of it came from fuels. VCCIcalculated the percentage will rise to 9.8 percent if import, specialconsumption and value-added taxes were included.
TheMinistry of Justice also asked the MoF to carefully consider the environmentalprotection increase as it would directly affect businesses and benefits forpeople.
It saidthe draft is not adequate and lacked assessments, with the proposedincrease nearly triple compared to the current level.
TheMinistry of Foreign Affairs also suggested the MoF consider whether theproposal is necessary, especially as local firms have faced difficulties andpetroleum is already subject to a number of taxes and fees.
Theministry also proposed supplementary assessments on socio-economic effectsafter the tax hike in the draft.
Earlier,MoF said the tax hike aims to improve awareness on environmental protection,contributing to limiting consumption of goods causing environmental pollution.
It saidthe draft is not adequate and lacked assessments, with the proposedincrease nearly triple compared to the current level.
TheMinistry of Foreign Affairs also suggested the MoF consider whether theproposal is necessary, especially as local firms have faced difficulties andpetroleum is already subject to a number of taxes and fees.
Theministry also proposed supplementary assessments on socio-economic effectsafter the tax hike in the draft.
Earlier,MoF said the tax hike aims to improve awareness on environmental protection,contributing to limiting consumption of goods causing environmental pollution.
It alsoaims to offset decreasing collections from import-export tax.
Theproposal was also believed to prevent smuggling of petroleum trading as Vietnam's petroleum prices have been lower than other countries in the region.-VNA
Theproposal was also believed to prevent smuggling of petroleum trading as Vietnam's petroleum prices have been lower than other countries in the region.-VNA
VNA
