Hanoi (VNS/VNA) - The Government isconsidering withdrawing a proposal from the Ministry of Finance (MoF) toincrease environmental taxes on fuel products to the maximum of 8,000 VND (0.35USD), stating the move requires further consideration.

The ministry has proposed several times almost tripling the environmentalprotection tax on oil and gas consumption to the maximum 8,000 VND perlitre, including in the draft revised Law on Environmental ProtectionTax. 

The environmental protection tax on petroleum products was last increasedon January 1, 2019, according to a resolution issued by the National AssemblyStanding Committee on October 20, 2018.

Under the resolution, the tax on gasoline was increased by 1,000 VND to 4,000 VNDper litre instead of 8,000 VND per litre as proposed by the MoF.

Kerosene was subject to an environmental tax of 1,000 VND per litre, 700 VND higherthan the current level.

In addition, taxes on lubricants and mazut were also raised to 2,000 VND perlitre from the previous level of 900 VND.

The bio-fuel E5 RON 92 is selling at 16,272 VND per litre, while that of RON95-III is 17,603 VND per litre. Each of petrol litre was added 1,000 VND dueto the hike of environmental tax. 

The Government has submitted a report to the National Assembly on law makingthis year and next, including the draft revised Law on Environmental ProtectionTax which has only focused on petrol. 

The Government said it would need more time to study the draft, especially theissue of expanding taxable subjects with adverse impacts on the environment.

The resolution proposed increasing environmental tax on gasoline, kerosene,diesel, mazut, aviation fuel and plastic bags to the highest level. Someproducts such as coal, herbicides, pesticides, forest preservatives andwarehouse disinfectants were not raised to the maximum tax level.

The drastic change would affect businesses’ production and competitiveness,prompting the Government to call for more time to consider the decree.

The MoF’s proposal raised concerns from experts and citizens. Many expertspointed out that raising environmental protection tax not only goes againststimulus measures but also creates inequality for low and middle income peopleand reduces domestic consumption.

Dang Thi Thu Hoai, Secretary of the Prime Minister’s Economic Advisory Group,warned the increase could affect businesses’ production costs andcompetitiveness.

She also said all people need petrol, including the poor, so the tax hike couldaffect income distribution.

Developed countries which have better social welfare systems have theconditions to apply such taxes, and while Vietnam can learn from such nations,the country must live in reality, she added.

Nguyen Thi Tue Anh, Deputy Director of the Central Institute for EconomicManagement said tax is only one tool to encourage green growth and sustainabledevelopment and other policies should be considered, such as green credit.-VNS/VNA