Ministry of Finance proposes reduction of green tax on petroleum

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Deputy Minister of Finance Ta Anh Tuan.

Petroleum prices have seen great fluctuations, what is the Ministry of Finance doing to stabilize the price of these items?

Since the beginning of 2022, the global petroleum prices have seen complicated fluctuations due to the impact of military movements in Ukraine along with the recovery of major economies after the Covid-19 pandemic. The Ministry of Finance, as a standing agency in charge of price management for the Government, is also very worried about the impact of petrol and oil prices on the challenge of inflation control in 2022.

In addition to solutions to stabilize gasoline prices to minimize negative effects, the Ministry of Finance has reported to the Government and the National Assembly Standing Committee on a number of tax policies to reduce gasoline prices. In early 2022, the Ministry of Finance submitted to the Government a 50% reduction of green tax on jet fuel from April 1, 2022. The Ministry continued to propose to the Government a 50% reduction of green tax on petroleum products.

Thus, the reduction of green tax on petroleum products from April 1, 2022 has reduced prices of these items by about VND770-2,200/liter and reduced state budget revenue by about VND23,900 billion.

However, global gasoline prices have repeatedly recorded fluctuations and the Ministry of Finance has consulted ministries and agencies to report to the Government and to the National Assembly Standing Committee on the reduction of green tax to the floor level. Thus, each liter of gasoline will decrease from VND550-1,100 depending on the type, reducing the state budget revenue in 2022 by about VND7,000 billion.

However, along with the recovery of the economy, when we control the pandemic, the overall state budget revenue in 2022 reached more than 60% of the assigned estimate. Therefore, in the general balance, the state budget will ensure to offset the revenue reduction due to the reduction of green tax.

In the immediate future, the Government reports that the National Assembly Standing Committee on the reduction of green tax on petroleum in 2022. By the end of 2022, we will re-evaluate the overall situation of gasoline prices.

So how will the Petroleum Price Stabilization Fund work, sir?

Following the direction of the Government, the Ministry of Finance is drafting an amendment to the Law on Prices on the market principle. We are consulting ministries, agencies, localities and relevant individuals on the revised Law on Prices.

For price stabilization, we have seven solutions and the establishment of a Price Stabilization Fund is one.

However, there have been many different opinions on the establishment of the Price Stabilization Fund.

In the current draft revised Price Law, the Ministry of Finance has removed the Price Stabilization Fund method from the Law on Prices to consult relevant organizations and individuals. After receiving opinions, the Ministry of Finance will synthesize and report to the Government and the National Assembly on amending the Law on Prices. We have persistently conducted price management according to market principles. However, it is said that the establishment of Price Stabilization Fund upon the price fluctuations is late and does not ensure market principles.

Some said that it is time for us to stockpile gasoline to stabilize the market in the long run. What do you think about this idea?

We appreciate the need to have enough fuel reserves to handle emergency situations. Recently, we have taken a step for gasoline reserves, but our petroleum reserves are still thin, so the reserved petroleum used for price stabilization has not had a positive impact.

Therefore, along with the financial capacity of the state budget and enterprises, we must increase petroleum reserves to stabilize prices.

To ensure price stability as well as to ensure the reserves of strategic commodities such as gasoline, we need to increase petroleum reserves.

The Ministry of Finance and Ministry of Industry and Trade have studied to increase the state's petroleum reserves, along with the reserves of businesses. In the near future, we can work towards international cooperation in petroleum reserves to prevent great fluctuations in petroleum.

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