Vietnam’s finance ministry pushes ahead with environmental tax hikes

Wednesday, 2018-05-16 16:16:22
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The tax will be raised to as much as VND4,000 per litre.
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NDO - The Ministry of Finance (MOF) has proposed increasing taxes on petrol and diesel to as much as VND4,000 per litre (nearly US$0.18) in a move to raise government income and encourage the use of environmentally friendly fuels.

The motion has been signed by Minister Dinh Tien Dung and will be submitted to the National Assembly’s Standing Committee.

Specifically, the tax on a litre of petrol will go up from the current VND3,000 to VND4,000, while a litre of diesel will be taxed at a rate of VND2,000, up from VND1,500.

The MOF also plans to raise the taxes on coal, the refrigerant gas HCFC, and plastic bags.

It is estimated that revenues from the environmental tax will increase by nearly VND15.2 trillion (US$668.8 million) to VND57.6 trillion (US$2.5 billion) if these measures are passed.

The ministry said that the new tax could come into effect from July this year and would contribute 0.11-0.15% to the consumer price index.

The MOF cited reduced government revenues from fuel import tariffs as a result of free trade agreements that Vietnam has signed as one of the reasons for its tax plan, adding that Vietnam’s fuel costs are among the lowest in the world.

It also argued that higher taxes will encourage energy efficiency as well as the use and production of environmentally friendly products such as biofuels and biodegradable bags.

Such measures will cut emissions, ensure sustainable economic growth, and fulfil Vietnam’s international commitments to environmental protection, the ministry said.