SCT suggests increasing the tax rate on pickup trucks to 60 per cent of that applied to passenger cars with the same engine capacity. — Photo of VTV

HÀ NỘI — There has been ongoing discussion regarding the proposed increase in the Special Consumption Tax (SCT) on pickup trucks, a move that has sparked debate among various National Assembly deputies.

The draft Law on Special Consumption Tax (SCT) suggests raising the tax rate on pickup trucks to 60 per cent of that applied to passenger cars with the same engine capacity. While this proposal is under review, several key issues have been raised about the impact of such an increase.

Under the existing law, pickup trucks are taxed at a rate ranging from 15 per cent to 25 per cent. The draft law proposes that the tax rate for double-cabin pickup trucks should be set at 60 per cent of the SCT rate for passenger cars. This means the tax on pickup trucks would increase from a range of 15 per cent-25 per cent to 24 per cent-54 per cent, a significant rise.

Delegate Nguyễn Thị Việt Nga expressed concern about the immediate effect of such an abrupt tax increase. She argued that implementing this tax hike in one go could negatively impact consumer behavior, potentially reducing vehicle sales. This, in turn, could lead to job losses and a decrease in State revenue from related taxes, such as import duties, registration fees and value-added taxes on both domestically produced and imported vehicles.

To mitigate the negative consequences of a sudden tax increase, Nga proposed that the Government implement a gradual increase over a three-year period, from 2027 to 2030. Under this plan, the tax rate would increase by 3 per cent per year, with a total increase of 9 per cent spread evenly across the three years, as opposed to a sharp rise of 9 to 20 per cent in the first year.

Delegate Nguyễn Văn Cảnh highlighted that in countries like the US and Thailand, pickup trucks are popular in rural areas and are primarily used for agricultural purposes. In Việt Nam, however, pickup trucks are often used in both rural and urban settings, with some even restricted from operating in urban areas during peak traffic hours.

He emphasised that if pickup trucks are treated as trucks, they should be subject to the same road use restrictions and taxes as trucks. On the other hand, if they are considered passenger vehicles, roads that allow passenger cars should also allow pickup trucks.

The National Assembly's Economic and Financial Committee reviewed the proposal and acknowledged concerns about the potential disruption to small businesses, particularly those in rural areas, which rely on pickup trucks for transporting goods. The Committee pointed out that pickup trucks are often used by small and medium-sized enterprises (SMEs), and increasing the tax rate could adversely affect their operations and the broader business environment. This concern was further supported by the observation that double-cabin cargo pickup trucks are typically used for at least 25 years and have a significant role in supporting small businesses outside urban centres.

The Economic - Financial Committee suggested considering postponing the application of the new tax regulations for pickup trucks to avoid negatively impacting businesses and the overall economy. They argued that, under the current special consumption tax system, pickup trucks already benefit from favourable taxation compared to other vehicle types.

Deputy Minister of Finance Cao Anh Tuấn clarified that the proposal to increase the tax rate stems from the fact that, under current traffic regulations, pickup trucks are treated like passenger vehicles. However, acknowledging the concerns raised about the potential sudden impact, the Government is considering a phased approach, with the SCT tax rate gradually increasing from 50 per cent to 60 per cent of the passenger car rate over the next three years.

The final decision on this matter will likely depend on further consultations and adjustments to the proposal, ensuring that it takes into account both the long-term benefits for the national budget and the short-term impacts on businesses and consumers. — VNS