Vietnam Petroleum Association: Raising petroleum environment taxes is reasonable

	Environmental tax for petroleum to be proposed to increase
	Tax accounts for more than 20% of retail price of petroleum
	Seal stamp on gasoline and petroleum to prevent loss of revenues

The Petroleum Association has proposed to raise the environmental protection tax on gasoline to 5,000 vnd per liter. Photo: H.Van.

Accordingly, the Association agrees with the plan to add objects and increase the frame of environmental protection tax rate for the petroleum products that the Ministry of Finance has put into the draft. The amendment and supplementation of the tax framework to ensure environmental protection responsibilities of individuals and organizations when using products with direct impacts on the environment and in line with the roadmap for international economic integration.

Therefore, the Vietnam Petroleum Association has recommended raising the environmental tax rate for gasoline from 3,000 vnd per liter to 5,000 vnd per liter. With this increase, the total tax will be equal to 48.91% of retail price and environmental protection tax will account for 58.88% of the total tax applied to the price of gasoline.

Environmental protection tax for diesel is also proposed to increase from 1,500 vnd per liter to 3,000 vnd per liter; aviation fuel from 3,000 vnd per liter to a maximum of 5,000 vnd per liter; mazut oil from 900 vnd per liter to 3,000 vnd per liter.

For biogenic petroleum products, VINPA agrees with the Ministry of Finance to choose the plan: If the fuel mix ratio is 5%, the environmental tax rate is equal to 80% of normal gasoline and diesel tax rates; if the fuel mix ratio is 10%, the environmental tax will be equal to 70% of normal gasoline and diesel respectively.

The association recognized that the increase in environmental protection taxes as proposed by the association was in line with the Vietnam’s economy, ensuring State budget revenues, energy security, and consumers benefit as well as benefits from trade agreements signed by Vietnam.

Earlier, the Ministry of Finance announced a bill amending and supplementing the Law on Environmental Protection, which proposed increasing the tax rate for gasoline and petroleum.

Explaining the reasons, Mr. Pham Dinh Thi, the Director of the Tax Policy Department, under the Ministry of Finance, said that petroleum products contain chemicals, causing negative impacts on the environment on a large scale. Countries in the world have brought petrol to the object of excise taxes and environmental protection taxes for the purpose of protecting the environment with different names such as fuel taxes, energy taxes, and vehicle taxes.

According to the current Law on Environmental Protection Tax, Petroleum is subject to a tax rate of 1,000 vnd-4,000 vnd per liter. The current level of environmental protection tax on gasoline is 3,000 vnd per liter, which is close to the maximum level in the tax framework; aviation fuel is 3,000 vnd per liter, equal to the maximum level in the tax framework.

Therefore, it is necessary to adjust the specific environmental protection tax rates on petroleum and gasoline in order to cope with the oil price fluctuations in the world market in a timely manner. It is very difficult to comply with the State's socio-economic development policy in each period, especially in the context of gradual reduction of import tax according to international commitments; and petroleum and gasoline price of Vietnam are lower than petroleum and gasoline prices of countries sharing border lines with Vietnam and other countries in ASEAN.

For example, our gasoline price is 4,766 vnd per liter lower than Laos, 4,246 vnd per liter lower than Philippines, 17,270 vnd per liter lower than Singapore, and 27,038 vnd per liter lower than Hong Kong.

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

The proposal to adjust the tax rate for petroleum and gasoline is aimed at: actively responding to the oil price fluctuation in the world market, ensuring national interests in the context of deep integration when gradually reducing import tax according to international commitments; ensuring the stability of the Law; submitting to the National Assembly Standing Committee for timely adjustment of specific tax rates to ensure the national interests in the event of high world oil prices; avoiding differences in the petrol price of Vietnam with the countries sharing the border; further increasing the responsibility and awareness of organizations and individuals towards the environment and encourage the production and use of environmentally friendly goods; ensuring the implementation of Vietnam's commitment to the international community on environmental protection.

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Mr. Thi also said that in the draft law, the Ministry of Finance proposed to adjust the environmental protection tax rate for petroleum and gasoline on the basis of calculating many factors to ensure the stability of the law. Therefore, the adjustment of the environmental protection tax framework for petroleum has not impacted the retail price of gasoline, as well as production and business.