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Vietnam’s plastic bag tax a lame-duck piece of legislation

Vietnam’s plastic bag tax a lame-duck piece of legislation

Tuesday, September 24, 2019, 11:39 GMT+7
Vietnam’s plastic bag tax a lame-duck piece of legislation
A seller wraps vegetables in a plastic bag at Ba Chieu Market in Ho Chi Minh City. Photo: Ngoc Phuong / Tuoi Tre

A tax imposed on plastic bag manufacturers in Vietnam has been proven ineffective in reducing the use of the bags as their market prices remain dirt cheap.

In 2010, Vietnam’s lawmaking National Assembly passed an environmental protection bill that introduced a tax of VND30,000-50,000 (US$1.3-2.15) on each kilogram of plastic bags.

The legislation, which looks to tax manufacturers rather than consumers of plastic bags, became effective from January 2012. The tax has been raised to its ceiling of VND50,000 since January 2019.

However, plastic bags continue to be widely available on the market at low prices of VND18,000-40,000 ($0.8-1.7) per kilogram, even lower than the tax.

Reporting from markets in Ho Chi Minh City on Sunday, Tuoi Tre (Youth) newspaper could find a pack of over 1,300 plastic bags sold for only VND40,000 ($1.70). That is equivalent to just over one-tenth of a U.S. cent a bag.

Similar prices were quoted at markets in Hanoi.

Plastic bags in use in Vietnam. Photo: T.D. / Tuoi Tre

Plastic bags in use in Vietnam. Photo: T.D. / Tuoi Tre

Pham Thuy Huyen, who runs a stall at Ha Dong Market in Hanoi, told Tuoi Tre she would always provide free plastic bags to customers for even small purchases.

Huyen said for a day’s worth of sales, she would use up around half a kilogram of plastic bags that only cost roughly a dollar.

“Many customers don’t like their veggies and meat put in the same bag,” said Truong Thi Phuc, a seller at Nam Thanh Cong Market in Hanoi.

“Some even accused the seller of being stingy when we didn’t give them separate plastic bags for each item.”

More bags used, less tax collected

The amount of plastic bags thrown into the environment in Ho Chi Minh City rose from 40 metric tons daily in 2008 to 228 metric tons daily in 2017, according to Deputy Chief State Auditor Nguyen Le Son.

But the amount of environmental protection tax collected from plastic bag manufacturers in the city saw a downward trend of 23 percent between 2014 and 2017, Son said.

Plastic bag imports also soared 250 percent during this period, from 63.8 metric tons in 2014 to 220 metric tons in 2017, he added.

The opposite trends of plastic bag usage and tax collection have raised questions on the effectiveness of such a tax in practice.

It is questionable that a product could be sold at a market price equal to only 65 percent of a single tax imposed on it, said Vinh Nga, a state auditor.

Plastic bags and other plastic products are sold at the Binh Tay Market in Ho Chi Minh City. Photo: Nguyet Nhi / Tuoi Tre

Plastic bags and other plastic products are sold at Binh Tay Market in Ho Chi Minh City. Photo: Nguyet Nhi / Tuoi Tre

Electricity usage statistics provided by the Ho Chi Minh City Power Company show that some local plastic bag manufacturers have been dishonest in declaring tax for only one-eighth of their actual production, the State Audit said.

Vietnam’s implementation of presumptive taxation for small and family-run establishments has allowed these facilities to avoid much of the plastic bag tax, state auditors said.

Dr. Nguyen Hoang Nam from the Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE) told Tuoi Tre it was high time Vietnam considered taxing end-users instead of manufacturers when it comes to the question of plastic bags.

Such a taxing method is more effective in bringing down consumption of plastic bags, but it would require greater effort in raising people’s awareness and producing more environment-friendly alternatives, Nam said.

If done correctly, such a tax could effectively raise the market prices of plastic bags by at least four to five times, said Dr. Dinh Trong Thinh from the Academy of Finance in Hanoi.

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