HÀ NỘI — The Ministry of Finance has proposed raising environmental protection taxes on oil and petroleum products from the current VNĐ3,000 (13 US cents) to the ceiling level of VNĐ4,000 (17 cents) per litre beginning July 1, 2018.

Accordingly, environmental protection taxes have been proposed to increase by VNĐ500 per liter of diesel oil to VNĐ2,000 and by VNĐ1,100 per liter of other oil products to VNĐ2,000.

Plastic bags are also expected to see higher environmental taxes, rising from the current VNĐ30,000 to VNĐ50,000 per kilo, if the draft is approved.

Last year, the ministry sought opinions about a draft law on the environmental protection tax hike to the highest level of VNĐ8,000 per litre. The proposal faced fierce opposition from both the public and economists.

In 2014, a similar hike was imposed, raising the taxes from VNĐ1,000 to VNĐ3,000, which the ministry referred to as a good way to stabilise the State budget.

The ministry said that the tax hike was necessary because import taxes on oil and petroleum products are declining sharply.

It added that petroleum is used in products containing chemicals, causing negative effects upon the environment, even when not in use. The current import tax on petroleum products is 20 per cent, and 7 per cent on oil products, and the respective rates will be slashed to 10 per cent and zero per cent as part of Việt Nam’s tax cut commitments.

With the tax cut, revenues from petrol imports have been continuously decreasing in the past few years, as importers were keen on markets with more preferential tariffs. In addition, retail prices of oil and petroleum products in Việt Nam are now lower than those in neighbouring countries, and other Southeast Asian nations, the ministry noted.

According to the ranking of the Global Petrol Prices on November 27, 2017, Việt Nam’s petrol retail selling price took 45th position among 167 countries and territories.  

“The environmental protection tax increase is suitable to the regulations under the Law on Environmental Protection Tax,” it said, adding that the hike would have effects on selling prices of other products. However, it would encourage savings of energies and natural resources, as well as consumption of environmentally friendly products, such as E5 bio-fuel. This could help Việt Nam reduce emissions, contributing to implementation of its international commitments on environmental protection.

The MoF calculated that the country could collect some VNĐ57.3 trillion per year from the taxes, increasing by VNĐ15.6 trillion from the current level.

In addition to the environmental protection taxes, collections from higher value added taxes would add an additional VNĐ1.56 trillion. The total collection to the State budget could rise by VNĐ17.2 trillion per year.

In January, Việt Nam imported 900,000 tonnes of various kinds of oil and petroleum products, totaling $552 million, marking respective rises of 3.5 per cent and 10.8 per cent, according to the General Statistics Office.

The current law on environmental protection taxes, issued in 2012, stipulates that products such as oil, gas, grease, coal, and plastic bags are subject to these types of taxes. — VNS