Ministries split over proposed environmental tax hike for fuels
The Ministry of Finance sought an environmental tax of VND4,000-8,000 per liter of gasoline compared to the current VND1,000-4,000, VND3,000-6,000 per liter of jet fuel, VND1,500-4,000 per liter of diesel oil, VND300-2,000 per liter of kerosene, VND900-4,000 per kilogram of heavy fuel oil, and VND900-4,000 per kilogram of lubricant.
In a report on the impact of draft amendments and supplements to the environmental protection law, the Ministry of Finance said the proposed environmental tax spike would leave no negative impact. However, the ministry has not mentioned its quantitative assessment which is required for such a report.
The ministry said there are grounds for the proposal as the environmental tax hike would help raise public awareness of environmental protection, limit consumption of pollution-causing goods, and match a roadmap to offset reductions of import tariffs in line with the country’s commitments to international trade deals.
The ministry said Vietnam cut the import tax on fuels to 0% last year and will lower that on gasoline to 8% in 2021, 5% in 2023 and 0% in 2024 as required by the trade pact among the ASEAN countries.
Under a free trade agreement between ASEAN and China, Vietnam lowered tariffs on oil imports to 5-8% last year. The import taxes on oil and gasoline will be brought down to 0% and 10% respectively in 2018 in accordance with the ASEAN-South Korea FTA.
An environmental tax increase reflects a trend in regional countries and will help prevent fuel smuggling. Therefore, the draft revision of the environmental protection law is necessary, the ministry said.
In their comments on draft amendments and supplements to the environmental protection law, a number of ministries have expressed concern over the negative impact of the environmental tax increase on the country’s socio-economic growth.
The Ministry of Foreign Affairs called for the ministry to weigh the viability of the environmental tax hike and devise an appropriate road map for it as many enterprises are still grappling with a host of difficulties and fuels now bear multiple taxes and fees.
The Ministry of Finance was urged to assess the impact of the environmental tax spike on the country’s growth.
Meanwhile, the Ministry of Justice said the draft amendments and supplements have many overlapping contents. It asked the Ministry of Finance to evaluate the effect of the draft revised environmental protection law, particularly the spike of the environmental tax on groups of goods, fuels and lubricant products.
