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Business community urges removal of luxury tax on petrol

The Vietnam Confederation of Commerce and Industry (VCCI) has proposed removing the luxury tax in addition to a cut in the environmental protection tax to help lower petrol prices, which are at a historic high.

VCCI made the proposal when offering suggestions to the draft resolution on the environmental protection tax applied to petrol, oil and lubricant compiled by the Ministry of Finance (MOF).

The organization agreed with the urgency of the reductions of tax obligations on petroleum products. It said this is the foundation for Vietnam to curb inflation, stabilize the macro economy, support business and recover the economy. 

Regarding the environmental protection tax, VCCI said the cut can be implemented in July 2022 because this is within the competence of the National Assembly’s Standing Committee. This is the advantage of the measure to adjust petroleum prices.

VCCI supports the MOF’s proposal on cutting the environmental protection tax by VND500-1,000 per liter, saying that these are the sharpest possible tax cuts within the competence of the committee. 

If the Government wants to cut luxury tax and value added tax (VAT), it would have to wait for the next National Assembly session, slated for late 2022. If so, the goals of controlling inflation and stabilizing the macro economy this year would be unattainable.

VCCI has proposed that MOF continue to study and consider the possible impact of the luxury tax removal on petrol and report to the National Assembly’s next session.

Regarding the cutting of tariffs on petroleum products, VCCI noted that MOF has not clearly explained why it has not chosen  the measure. The measure can be easily taken as it is within the competence of the Government and it can be done in July. 

According to VCCI, in its statement, MOF mentioned Vietnam’s commitments in free trade agreements (FTA), and believes that Vietnam should not adjust FTA tax rates on petroleum products, and should continue to implement the current tax cut roadmap.

However, VCCI checked the agreements and realized that these are commitments on maximum import tax rates that Vietnam is allowed to apply. 

It affirmed that the FTAs allow Vietnam to lower import tariffs and then raise the tariffs back to the committed levels when necessary.

VCCI has asked MOF to consider cutting import tariffs or give more detailed explanation about measures to force petrol prices down.

The petrol price is now at an all-time high after the latest price increase on June 21. One liter of E5 RON92 is VND31,300 per liter, while RON 95-III is VND32,870 per liter.

Gia Hung


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