An increase in taxes will not necessarily lead to higher petrol prices

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Minister Dinh Tien Dung at the meeting.

Propose to increase petrol price to the ceiling price

According to the report on the project on environmental protection tariff, the Government has proposed increasing the petrol price from VND 3,000 per liter to VND 4,000 per liter (an increase of VND1,000 per liter). Diesel shall increase from VND 1,500 per liter to VND 2,000 per liter (an increase of VND 500 per liter). Mazut oil shall increase from 900 VND per liter to the ceiling price of VND 2,000 per liter (an increase of VND 1,100 per liter).

Grease shall increase from VND 900 per kg to VND 2,000 per kg (an increase of VND 1,100 per kg). Kerosene shall increase from VND 300 per liter to VND 2,000 per liter (an increase of VND 1,700 per liter). For coal, the proposal from the government is to increase the price of anthracite coal from VND 20,000 per ton to VND 30,000 per ton (an increase of VND 10,000 per ton). Brown coal, charcoal and other coal shall increase from VND 10,000 per ton to VND 15,000 per ton, an increase of VND 5,000 per ton.

For HCFCs, the Government proposed increasing tariffs on HCFCs from VND 4,000 per kg to VND 5,000 per kg (an increase of VND 1,000 per kg) .

For taxable plastic bags, the Government proposed increasing the tax rate from VND 40,000 per kg to VND 50,000 per kg (an increase of VND 10,000 per kg).

The adjustment plan mentioned above will affect the average consumer price index (CPI) in 2018 by about 0.11-0.15%. However, the tax increases will encourage energy saving and efficient use of resources, as well as contributing and encouraging the production and consumption of environmentally friendly goods.

At the same time, it will contribute to increase budget revenues by about VND 15,189.2 billion per year, thereby generating additional revenues for the implementation of socio-economic tasks, including spending on environmental protection.

Examining this draft, the majority of opinions in the Finance-Budget Committee agreed with the Government's report. However, in order to ensure the consensus of the society in the adjustment of the environmental protection tax rate and to serve as a basis for the National Assembly Standing Committee to pass a resolution, the Committee recommended the Government to report some contents more clearly.

This agency also analyzed impact on the efficiency of the economy in general, and production, business of enterprises, people's lives in particular, and consumer price index. The use of sources of revenues from environmental protection tax should be prioritized to deal with environmental remedies.

On specific proposals, such as tax increases for gasoline, some people said that in the current conditions, CPI in the first 6 months increased by 3.29%, gradually approaching the National Assembly target of 4% for ensuring macroeconomic stability, and for avoiding a great impact on the production and business activities of enterprises and people's lives.

With oil, most of the comments in the Committee suggested that the Government’s statement for rate increases will be too high and sudden, which can affect the production and businesses as well as people in remote areas.

Accordingly, the Ministry of Finance requested the Prime Minister to increase the tax rate for oil from VND 300 per liter to VND 1,000 per liter. The majority of opinions in the Committee agreed with the plan to adjust the tax rate for oil set by the Ministry of Finance. However, some delegates proposed raising the oil price up to VND 1,500 per liter, even agreed with the Government's proposal to increase from VND 300 per liter to the ceiling price of VND 2,000 per liter.

Not yet voted

Participating in the discussion, members of the Standing Committee of the National Assembly raised a few concerns about the timing, roadmap, impact on CPI, social effects, etc.

The National Assembly Chairwoman, Ms. Nguyen Thi Kim Ngan said that if we can raise inflationa little, but it generates revenue of nearly VND 16 trillion, it is a necessity that should be done. Moreover, the Chairwoman said that "tax increases leading to price increase" was not correct.

Accordingly, Chairwoman Nguyen Thi Kim Ngan stated: If petroleum businesses have solutions to save money in other stages (transport, preservation), the petrol price is not likely to increase.

According to the Chairwoman of the National Assembly, the increase in revenues from raising taxes will increase spending on environmental protection, which should be clearly stated in the resolution if adopted. "In doing so, society will find it easier to agree," said Ms. Nguyen Thi Kim Ngan.

On the behalf of the Government, Minister of Finance Dinh Tien Dung had to stand up two times for explanation. The Minister also concurred with the speech of the National Assembly Chairwoman.

If approved, from now until the end of 2018, the State will earn about VND 3 trillion. The Minister agreed to include this amount in climate change mitigation projects and environmental impact programs. This content was also put directly into the Resolution to unify implementation from central to local level.

At the time, to avoid much impact on the CPI, the Minister proposed to apply from 1 August 2018 or from 1 October 2018.

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However, because of the lack of attention, the Standing Committee of the National Assembly has not yet voted on the effective date of this Resolution.