On May 1, 2015, Resolution 888a/2015/UBTVQH 13, amendments and supplements to Resolution 1269/2011/UBTVQH12 on environmental protection tax, started taking effect. Accordingly, environmental protection tax on gasoline rose from VND1,000/litre to VND3,000/litre; jet fuel rose from VND1,000/litre to VND3,000/litre; diesel from VND500/litre to VND1,500/litre; mazut oil and lubricant climbed from VND300/litre to VND900/litre; grease increased from VND300/kg to VND900/kg.
Under commitments in the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN–China Free Trade Area (ACFTA) and the ASEAN Korea Free Trade Agreement (AKFTA), Vietnam must follow the roadmap of cutting preferential tariffs on oil and petroleum products. According to the roadmap of cutting preferential tariffs on oil under ATIGA, ACFTA and AKFTA agreements, the gap between the current Most Favoured Nation tariff (MFN) and the tariff under those agreements should be 5-35 percent depending on specific category and this gap will be widen in subsequent years.
Thus, one commodity (oil) will have different tariffs (MFN, ATIGA, ACFTA, AKFTA), posing risk to the state budget, as well as to the national economy when petroleum exporters increase price. In order to have one level of oil tariff only, the MFN must be adjusted to equal the most preferential tariffs under international commitments (ATIGA). This will definitely create a negative impact, shrinking state budget revenues.
According to the Ministry of Finance, the increase of environmental protection tax will not raise prices of domestic petrol and oil as in the same ground with global oil prices, tax structure in petrol price does not increase but reduce (the increase of environmental protection tax still lower than the decrease of tariffs following international commitments). Moreover, the increase of environmental protection tax for petrol is consistent with the objective of environmental taxes, which is attacking on commodities adversely affecting the environment (gasoline is a product containing chemicals, which can cause adverse impacts on the environment at a large scale, therefore, it’s necessary to regulate high taxes on gasoline - previously, Resolution 1269/2011/UBTVQH12 only regulates environmental protection tax rate for petrol at minimum in the tax bracket and on the same level with the fuel cost is for the purpose to not disturb the management of revenue and expenditure when switching from fuel fees to environmental protection tax on petrol).
Based on the environmental protection tax on gasoline passed by the Standing Committee of the National Assembly, the Ministry of Finance will implement policies of gasoline tariff accordingly so that the people will benefit when world gas prices fall.
Even when added the increased environmental protection tax on gasoline (VND2,000/litre), Ron 92 gasoline price of Vietnam is still lower than some countries in the region.
Thanh Nga
Vietnamese
