Proposal on VAT reduction in electricity bills unreasonable

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Minister of Finance Ho Duc Phoc answers questions at the 36th Meeting.

Answering questions about the issue of VAT reduction in electricity bills to ensure reduction in electricity prices as stated by delegate Pham Van Hoa (Dong Thap province National Assembly delegate), Minister of Finance Ho Duc Phoc said taxes are the main source of revenue for the state budget, tax reduction to deal with industries with large price fluctuations is unreasonable.

The Minister said that in fact, the National Assembly has reduced taxes for businesses, business households, and individuals. Besides, regarding the ladder price of electricity and household electricity, there are currently regulations to support poor households, policy families, etc. At the same time, electricity price level 1 also gives priority to customers using electricity economically.

Previously, on the issue of calculating ladder electricity prices, responding to the deputy Pham Van Hoa's question, Minister of Industry and Trade Nguyen Hong Dien said that the ladder electricity charges are a popular model in all countries to encourage customers to use electricity economically and efficiently.

In Vietnam, the average retail electricity price structure includes 6 levels. Implementing the Resolution of the National Assembly Standing Committee, the Government has directed and the Ministry of Industry and Trade presided over amending and supplementing a number of decrees to reduce from 6 levels to 5 levels, in which the first level increases from 0-50 kWh to 0-100 kWh.

Thus, the deputies’ proposal has been received and presented to the Government. The goal of this proposal is to maintain the price level of support for the poor and people in difficult circumstances from the state budget at the electricity amount of 0-30kWh, and from 30kWh to the end of level 1, consumers must pay bills according to the regulations.

According to the Minister of Industry and Trade, unlike other industries, with the electricity industry, the more it produces, the more it affects the environment. Energy is also a fairly large emission industry in Vietnam, and it is necessary to increase social responsibility in environmental protection.