Vietnam fuel tax set to rise to highest level

By Nguyen Ha   July 4, 2018 | 07:28 pm PT
Vietnam fuel tax set to rise to highest level
A worker pumps petrol at a station in Hanoi. Photo by Reuters
Proposed tax increase will boost annual collections by $2.4 billion, it is estimated.

Prime Minister Nguyen Xuan Phuc will persist with a controversial plan to increase environmental tax on fuel to the highest level permitted, a source told VnExpress.

A Finance Ministry official who did not want to be named said the plan will be discussed at the meeting of the Standing Committee of the National Assembly, Vietnam’s parliament, which is scheduled on July 11-13.

Should it pass, the new tax will take effect starting this October, three months later than the original schedule.

The reason for the delay, the official said, was that the Finance Ministry did not want to impose the tax in September, as a majority of students would be starting a new school year then.

The ensuing surge in transportation could affect the consumer price index, the source explained.

Under the proposal, the environmental tax on petrol and diesel will increase by 33 percent, or VND4,000 (17 cents) per liter and VND2,000 per liter respectively.

The increase is necessary because import taxes have been plunging recently, according to the Ministry of Finance.

The current import tax on petrol and diesel, 20 percent and 7 percent respectively, is set to fall further to 10 percent and 0 percent under trade pact commitments.

The proposed tax will bring VND57.3 trillion ($2.4 billion) each year to state coffers, an annual increase of VND15.7 trillion ($650.2 million) from current collections.

When the Finance Ministry had made the proposal to increase the environmental tax on fuel earlier this year, it faced strong public opposition.

But the ministry defended its proposal by saying that fuel prices in Vietnam were still low compared to other countries and the plan had the support of many ministries and departments.

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