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Sunday, June 16, 2024

Fuel tax cut should be significant given high crude oil export price: official

The Saigon Times

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HCMC – The environmental protection tax on fuel should be reduced greatly as State budget revenue has been rising thanks to a rising crude oil export price, said Dau Anh Tuan, head of the Legal Department of the Vietnam Chamber of Commerce and Industry (VCCI).

VCCI had proposed reducing the tax by VND2,000 on each liter of gasoline and VND1,000 on each liter or kilogram of diesel and lubricating oil, double the reduction proposed by the Ministry of Finance, Tuoi Tre Online newspaper reported.

If the tax cut proposed by the Ministry of Finance is applied, the State budget would lose some VND12 trillion.

However, the country’s revenue from crude oil exports has been soaring. According to the General Department of Taxation, the revenue from crude oil exports in the first two months of the year surged 57.2% year-on-year although the crude oil export volume dropped nearly 9%.

In addition, when the global fuel prices increased, the tax revenue from fuels traded in the domestic market also soared.

Therefore, the State should share the difficulties of residents and enterprises by cutting the environmental protection tax as enterprises are recovering from the pandemic.

According to the General Statistics Office, fuel costs account for 3.52% of the total production costs of the local economy. The proportion in some sectors is 30%-40%.

The fuel price hike will lead to a hike in the transport costs and the prices of goods and services. The production, aviation and auto transport sectors, already battered by the Covid pandemic, will be hit heavily.

Without solutions, economic recovery support policies, especially a value added tax reduction of 2%, would be rendered ineffective.

The fuel price may rise further in the coming days and months. The local authorities must be prepared for all possible scenarios and work out more appropriate regulation plans.

Policies should be made flexible. The environmental protection tax on fuel could be cut for three to four months and be adjusted or extended later, instead of applying the reduction until the end of the year as proposed by the Ministry of Finance.

The reduction of the environmental protection tax on fuel is under the jurisdiction of the National Assembly’s Standing Committee, so it will take time. The NA’s Standing Committee should issue a tax framework and the Government can regulate the tax within the framework.

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