Increase the environmental protection tax frame with petrol and oil mainly to actively respond when needed

Mr. Pham Dinh Thi.

Sir, what is the basis for the Ministry of Finance proposed adjustments to the framework of environmental protection tax for petrol and oil?

Petroleum is a product that contains chemicals that adversely affect the environment on a large scale. Countries around the world have brought petrol to collectors of special consumption tax and environmental protection tax for the purpose of environmental protection with different names such as fuel tax, energy tax, vehicle tax etc.

According to the current environmental protection law, petrol is subject to tax with a tax frame of 1,000-4,000 VND per litre. The current environmental protection tax rate for gasoline is 3,000 VND per litre, which is close to the maximum level in the tax frame; for flying fuel is 3,000 VND per litre, equal to the maximum in the tax frame.

Thus, in case it is necessary to adjust the specific environmental protection tax rate for petrol and oil in order to cope with the oil price fluctuations on the world market in time; it is very difficult to comply with the socio-economic development policy of the State in each period, especially in the context of gradual reduction of import tax according to international commitments and petrol price of Vietnam is lower compared to gasoline prices of countries sharing borderline in particular and other countries in the ASEAN region in general.

For example, our gasoline price is lower than Laos is 4,766 VND/litre, Philippines is 4,246 VND/litre, Singapore is 17,270 VND/litre, Hong Kong is 27,038 VND/litre.

Based on the overall review of many factors, the Ministry of Finance has proposed to raise the environmental protection tax frame from 1,000-4,000 VND per litre to VND 3,000-8,000 per litre.

The proposal to adjust the tax frame for petrol is aimed at: actively responding to world oil price fluctuations, ensuring national interests in the context of deep integration when gradually reducing import tax according to international commitments; ensure the stability of the Law; to submit to the National Assembly Standing Committee for timely adjustment of specific tax rates to ensure national interests in case of high fluctuations in international oil prices; to avoid a great difference in Vietnam's petrol price with those of countries sharing the borderline; to raise the responsibility and awareness of organizations and individuals towards the environment and encourage the production and use of environmentally friendly goods; ensure the implementation of Vietnam's commitment to the international community on environmental protection.

How will the adjustment of the environmental protection tax rate of petrol and oil affect the production and business prices?

The Law on Environmental Protection only regulates the environmental protection tax frame. On the basis of assessing the specific impact on business activities of enterprises, to the retail price of gasoline and people's life, depending on the socio-economic conditions in each period, the Government shall submit to the The National Assembly Standing Committee to decide on the specific environmental protection tax rates applicable to petrol and oil within the framework prescribed in the Law.

At the draft law, the Ministry of Finance has proposed adjusting the environmental protection tax frame for gasoline and oil on the basis of calculating many factors to ensure the stability of the law applied for a long time.

Therefore, the adjustment of the environmental protection tax frame for petroleum has not affected the retail price of gasoline, as well as production and business.

It has been argued that the increase of the environmental protection tax frame for petroleum will reduce the competitiveness of enterprises and is not in line with the policy of creating favourable conditions for the development of enterprises. What is the view of the Ministry of Finance on this issue?

The proposal to adjust the environmental protection tax frame for petrol and oil is based on many factors such as international commitments to gradually reduce import tax, petrol prices of Vietnam compared with other countries in the world, especially countries sharing borders, tax rates on petrol retail prices.

When proposing a specific environmental protection tax rate, the Ministry of Finance will have to assess the impact of tariff adjustments on the domestic economy to ensure, along with many other options, it will not reduce the competitiveness or development of Vietnamese enterprises.

Thank you, Sir!