Ministry proposes raising environmental tax on petrol

The Ministry of Finance has proposed a rise of environmental protection tax on petrol to the ceiling level of VND4,000 (17 US cent) per litre from the current VND3,000 (13 US cent) per litre.

ministry proposes raising environmental tax on petrol hinh 0
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In a draft resolution on environmental protection tax list it has sent to the National Assembly Standing Committee, the ministry also suggested an increase of tax for oil products to another ceiling level of VND2,000 (8 US cent) per litre.

With the raise, State budget collection from petrol and oil taxes will reach about over VND55 trillion (US$2.42 billion), about VND14.3 trillion higher than the current amount.

Apart from petrol, environment taxes for other products such as fossil coal, hydrocloflocacbon (HCFC), and plastic bags will also rise from VND1,000 VND-VND10,000.

Specifically, tax on fossil coal will be up by VND5,000-VND10,000 per tonne, resulting in tax revenue of about VND2.38 trillion each year, an increase of VND795 billion each year.

Meanwhile, tax on plastic bags will also rise by VND10,000 each kilo, which means from VND40,000 per kilo at present to VND50,000 per kilo. Estimated tax revenue from the product will be about VND67.5 billion.

According to the ministry, if the proposal is approved, total revenues from environmental protection taxes will be about VND57.61 trillion per year, up about VND15.18 trillion per year.

The ministry explained that the environmental tax for oil and petrol products have been applied since 2012, helping raise public responsibility and awareness of preserving the environment, while encouraging the production and use of green products as Vietnam is gradually cutting import taxes following its international commitments.

From 2012-2017, total collection from environmental protection taxes were about VND150 trillion, or VND25 trillion each year.

However, the ministry recognised the need to adjust the taxes to a more suitable level, as the retail prices of petrol in Vietnam is lower than that in neighbouring countries and some countries in the ASEAN and Asia.

Currently, Vietnam’s petrol retail price at VND19,980 (US$0.87) per litre is lower than that in 120 other countries.

At the same time, the ministry underlined that research showed that the use of goods  that are subject to environmental protection tax harms the environment. Scientists’ calculation clarified that the tax must be much higher in order to fix the harms done by those goods.

A survey of the ministry on the proposed environmental tax raise on the online portals of the Government and the ministry has received 77 opinions of other sectors and ministries, localities, business associations and organisations, of which 47 opinions agreed on the necessity of the tax increase.

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