Raising the environmental tax on gasoline: A deliberate step

	Proposing the adjustment of environmental taxes contributes to limiting petrol smuggling
	Why does the Ministry of Finance propose increasing the environmental tax on gasoline?
	What does the Ministry of Finance say about the increase of the environmental tax on oil and gas?

The retail price for petrol in Vietnam is lower than that in 122 countries. Photo: Hong Van.

Promote the use of clean fuels

According to the draft, the proposed environmental protection tax rate for gasoline shall increase from VND 3,000 per liter to VND 4,000 per liter, an increase of VND 1,000 per liter; diesel from VND 1,500 per liter to VND 2,000 per liter, an increase of VND 500 per liter; mazut oil from 900 VND per liter to the ceiling of 2,000 VND per liter, an increase of 1,100 VND per liter; grease from 900 VND per kg to the ceiling of 2,000 VND per kg, an increase of 1,100 VND per kg; kerosene from VND 300 per liter to VND 2,000 per liter, an increase of VND 1,700 per liter.

The proposal to raise taxes on petrol and oil in order to further raise the responsibility and awareness of organizations and individuals towards environment protection; contributing to limiting the use of fossil fuel products, causing environmental pollution; Encouraging organizations and individuals to produce and use substitute environmentally friendly products (such as bio-fuel); to ensure the national interests in the context of deep integration when implementing import duty reduction according to international commitments and unpredictable oil prices.

For further analysis, Mr. Pham Dinh Thi, Director of Tax Policy Department, under the Ministry of Finance said: Currently, we are implementing FTAs and import taxes are falling rapidly. An increase in other taxes will be one of the sources to offset revenues from imports. However, from the perspective of environmental protection, gasoline, plastic bags and HCFCs are the items causing a very bad impact on the environment.

Mr. Thi added that not only Vietnam, but also other countries in the world have regulated the taxation of petroleum and petroleum products to encourage people to use environmentally friendly products. For example, from 1 January 2018, Vietnam shall not use A92 gasoline anymore but is to use E5 instead. It is also a way to protect the environment.

On the other hand, current gas prices in Vietnam are low compared to countries sharing our borders in Asia, as well as othercountries in the world. According to the ranking of 167 countries, Vietnam is ranked 45th. Thus, retail price for petrol in Vietnam is lower than that in 122 countries.

Ms. Vu Thi Mai, the Deputy Minister of Finance said that the tax increase was based on Resolution No. 07-NQ / TU of the Politburo on the policy with solutions to restructure the State budget and public debt management to ensure a safe and sustainable national finance, to restructure State budget revenues.

In addition, the National Assembly has also adopted Resolution No. 25/2016 / QH14 on the National Five-Year Financial Plan for 2016-2020, proposing solutions to restructure the state budget to complete the restructuring of state budget revenues. Make good use of revenues from assets, resources and the environment.

Moreover, the content of the draft resolution has been commented on by the National Assembly Standing Committee on the drafting of the Law amending and supplementing the Law on Environmental Protection. The draft law is backed up to 2019, so the first step is to submit the adjustment of environmental protection tax rates set by the Standing Committee of the National Assembly.

"The resolution to increase environmental protection tax is in line with the growth strategy and practical situation in each period and the situation of environmental pollution,” the Deputy Minister Vu Thi Mai said.

Need sharing

Assoc. Prof. Dr. Le Xuan Truong, Dean of the Faculty of Taxation, under the Finance Academy, said that petrol was an important item for the State, as well as an important input for transportation businesses and some other production sectors, and for people's transport. The increase of environmental protection tax on gasoline not only affects the state budget revenue but also affects the market price and people's lives. Therefore, every proposal to increase or reduce the environmental protection tax for gasoline must be carefully considered and the Ministry of Finance knows this very clearly.

In fact, an increase of environmental protection tax on gasoline and petroleum as proposed is necessary and reasonable for 3 reasons. Firstly, to ensure budget revenue under the condition of import tax on petroleum, which must be adjusted to decrease due to the FTAs. Secondly, before proposing to increase environmental protection tax for gasoline, the tax on petrol has decreased a lot and the State has to reduce its budget to support businesses and people, so it is time for businesses and people to share with the State. Thirdly, it should reduce the pressure of petroleum smuggling on other state agencies by adjusting Vietnam's petroleum price to be equal to that of other countries in the region. The proposed increase is to ensure the harmonious sharing of interests of the State, enterprises and consumers.

The majority of respondents agreed to increase the environmental tax on petroleum VCN- The Ministry of Finance has issued a formal report explaining and accepting opinions of ministries, branches, ...

From another perspective, Assoc. Prof. Dinh Trong Thinh, under the Finance Academy stated: An increase of environmental protection tax will affect many petroleum product prices. The increase in petrol and gasoline prices will also have an impact on business activities of enterprises. Enterprises have to accept and must understand that for many yearsour petrol price is lower than that of other countries in the region because it is still receiving the protection of the state. However, in that context, we have to accept the "drop" in price according to the general trend of the market economy, and the State can not protect forever. Therefore, enterprises and people need to share with the State in the context of a difficult budget.