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Tax and fee policies are an effective support tool for green growth. Photo: Internet

On the morning of March 11th, 2019 in Hanoi, the Director of the Central Institute for Economic Management (CIEM) organized a workshop on "Announcing results of the study on using tax policy tools to regulate the economy towards green growth and sustainable development in Vietnam.”

This research was carried out within the framework of a tax policy project funded by the Belgium - Vietnamese Study and Consultancy Fund (SCF) for the Financial Strategy and Policy Institute, Ministry of Finance. The study results are expected to contribute to strengthening the scientific arguments on using tax policy to regulate the economy to promote green growth and sustainable development in Vietnam, which is for the construction of Tax Reform Strategy for the 2021-2030 period and Financial Strategy for the 2021-2030 period.

Mr. Nguyen Manh Hai, Director of the Research Department of Social Affairs, CIEM, said that the tax and fee policy is a Government’s macro regulatory tool that can be used to affect the acts of production and consumption of entities in the economy through tax incentives for eco-friendly economic activities; at the same time, levying tax on economic activities harming the environment.

According to international experience, the approach to promoting green growth and sustainable development in different countries may be different, but all countries are heading towards green production and consumption; reducing CO2 emissions causing greenhouse effect; adapting to climate change ...; accordingly, applying economic tools to force manufacturers to include environmental protection costs into product prices; and encouraging manufacturers in the environmental protection investment.

Therefore, Mr. Hai said, some countries are taking measures such as: exempting corporate income tax for income from transfer of emission reduction certificates; giving tax incentives for high-tech enterprises; applying tax policies to limit production and consumption of products harming the environment.

In Vietnam, the study tells that the tax policy related to green growth and sustainable development goal include policies on exempting corporate income tax for income from transfer of emission reduction certificates; applying the tax rate of 10% for enterprise’s income from doing socialization activities in the field of environment; exempting import and export duties for imported goods for direct use in scientific research and technological development activities.

Mr. Nguyen Manh Hai evaluated that Vietnam has issued and applied a number of tax policies related to green growth and sustainable development in accordance with international practices. However, tax incentives are not powerful enough to encourage green production and consumption. In addition, the tax policy to restrict production and consumption of hazardous products to the environment is not appropriate with the reality, the revenue from these taxes is not commensurate with the damages caused by production and consumption activities and so on.

In the same view, Mr. Le Quang Thuan, Director of the International Finance Department, National Institute for Finance said tax policy is considered an effective tool to promote sustainable development and green growth. However, the implementation of this policy is not easy, so it needs a further study and to continue improving policies in a specific way to enhance efficiency.

With the importance of environmental protection, to complete the tax policy to regulate the economy for promoting green growth, the CIEM’s representative proposed that the corporate income tax incentive policy must be improved both in incentive rate and time to selectively invest in the development of high-tech industry which uses eco-friendly technology and has high added value; to encourage clean energy production and public transport development.

In addition, Mr. Hai said that the management agencies need to stipulate the special consumption tax rate for bio-gaosline by 50% of the tax rate for mineral gasoline to create a significant difference between bio-gasoline and mineral gasoline. It is necessary to increase the collection rate and combine the fixed tax rate and the percentage tax rate; It needs to expand the scope of subjects of environmental protection tax to cover all products harming the environment such as chemical fertilizers; emissions, etc.

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For the fee policy on environmental protection, the study shows that the approach must follow the market price mechanism, ensuring the principle that "polluters must pay fee"; private sector is encouraged to invest in waste collection and treatment.