Finance ministry sees wisdom of halving gasoline environment tax

If the government approves the proposal, from next month the tax will be reduced from VND4,000 ($0.18) to VND2,000 per liter on gasoline and from VND2,000 to VND1,000 on diesel.

The ministry had earlier suggested a 25 percent cut while many others, including the Ministry of Industry and Trade, had demanded a 50 percent reduction as pump prices climbed to new peaks amid a global shortage caused by the Russia-Ukraine crisis.

The popular RON95 variety of gasoline is now at a historic high of VND26,830 per liter after having increased by more than 15 percent this year amid a global shortage caused by the Russia-Ukraine crisis.

They are expected to rise to another all-time high on Friday afternoon. Prices could rise by VND5,000-8,000 on Friday, or 18-30 percent, which would have a major impact on inflation, the Ministry of Industry and Trade said.

Gasoline distributors have been complaining they are selling at a loss due to the large gap between local and global prices.

The gasoline stabilization fund, set up to contain any rise in prices if needed, now only has a balance of VND620 billion.