Increasing the environmental protection tax on petroleum products: The transport enterprises shall balance the expenses to do not increase the prices

One of the industries directly affected by the increase of environmental protection taxes on petroleum products is transport companies. Picture: ST.

Increase 5% of total cost

The Standing Committee of the National Assembly has approved the resolution to increase environmental protection tax on petroleum products.

One of the industries directly and strongly influenced by the increase of environmental protection tax on petroleum products is transport enterprises. Because the cost of petrol is one of the major costs of transport businesses, this will add to transportation costs.

Mr Nguyen Van Thanh, Chairman of the Vietnam Automobile Transportation Association, said that raising the environmental protection tax on petrol from 3,000 dong to 4,000 dong per liter was in line and there has been a careful calculation of the impact as well as the latency of the implementation.

According to the Chairman of the Vietnam Automobile Transport Association, this increase will certainly affect transport costs, including freight rates, but it does not impact much because the increase of environmental protection tax is not big. Specifically, the cost of gasoline accounts for 30-40% of the cost of transportation business, so the increase of environmental protection tax from 3,000 to 4,000 per liter will be equivalent to 5% of the cost to an enterprise. Immediately, this impact is not large, but from January 1, 2019, petrol prices will be more volatile, some changes from other costs will also affect transport enterprises.

"However, in facing the fierce competition among transport enterprises, the enterprises themselves will have to balance the savings from their own activities before deciding to increase freight costs or not. There will be a certain lag to increases. According to Mr Thanh, if there is a rise, it will be very little because of fierce competition among transport companies. It will be necessary to 'keep' the price, if the transport enterprises want to keep customers," Mr Thanh said.

Consideration in increasing the price

Having the same viewpoint of supporting for the increase of environmental protection tax at this time, Mr Bui Danh Lien, Vice Chairman of the Hanoi Transport Association said that this is the right policy of the State and with the increase from 3,000 VND to VND4,000 (an increase of VND1,000 compared to before) it is appropriate.

However, according to Mr. Lien, the revenue of environmental protection tax should be transparent and publicized in collecting and spending by the State. From there, people will agree and strictly abide by this policy.

Mr Lien assessed that the level of this impact is small, but "Many a little makes a mickle," with the environmental protection tax for petroleum increased, each liter of gasoline transport enterprises will have to spend VND1,000 more. This figure seems small, but accumulated over a whole year will lead to quite a large increase in business costs.

At the same time, the input costs and petrol prices increase, the costs of some commodities will increase accordingly, so the enterprises will have to consider increasing the freight to cover their input costs. That burden of charge will be on people's heads. In particular, for transportation contracts that have already been signed , it is impossible to increase the freight cost.