Vietnam’s finance ministry proposes hiking environmental protection taxes on fuel to highest

All petrol products will be taxable at the highest rate

A pump attendant refills a customer’s vehicle at a filling station in Ho Chi Minh City. Photo: Tuoi Tre

Vietnam’s Ministry of Finance has formally suggested increasing environmental protection taxes on all petroleum products to the highest rates allowed by law, angering consumers as it remains unclear how the taxes, collected since 2012, have been used.

The environmental protection taxes for all petroleum products, including gasoline, diesel and fuel oil, should be lifted to the ceiling rates, according to the suggestion, signed by Minister of Finance Dinh Tien Dung and submitted to the Standing Committee of the lawmaking National Assembly.

Gasoline is currently subject to an environmental protection tax of VND3,000 a liter, and the ministry wants to hike it to the ceiling rate of VND4,000 a liter. (US$1 = VND22,700)

Similarly, the taxes on diesel and fuel oil are proposed to be elevated to VND2,000 per liter, from the respective rates of only VND1,500 per liter and VND900 per liter.

The ministry also proposed higher tax rates for other harmful products, such as coal, chlorofluorocarbons solution and plastic bags.

If approved, the new taxes will come into effect on July 1, 2018, with the collected taxes estimated at VND57,612 billion ($2.5 billion) per year, up VND15,189 billion ($660.7 million) per year from the revenue generated by the current tax rates.

The higher environmental protection taxes are meant to make Vietnamese fuel prices to be on a par with other regional countries, according to the ministry.

Vietnam's retail price of petrol, currently fetching VND19,980 per liter, ranks 47th among 167 countries around the world, from the lowest to highest, which means fuel in Vietnam is still cheaper than 120 other nations, the ministry said, without saying where the statistics are from.

The higher taxes are also meant to promote responsibility and awareness of environmental protection among local consumers, and to encourage the use of alternatives or environment-friendly products like biofuel, according to the ministry.

Besides resolving environmental issues, the revenue from the environmental protection tax on fuel will also help make up for budget revenue loss, as Vietnam has to cut import duties for several petroleum products.

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