Answering questions from reporters at the Government press conference on July 4 on the further cut of VND1,000 per liter in environmental protection tax and the increases in revenue from oil price increases, Chi said under pressure of high global prices, the Ministry of Finance (MOF) has taken the initiative in designing solutions related to petrol taxes so as to curb price increases which may impact the economy, businesses and people’s lives.

“The government today submits to the National Assembly Standing Committee a plan on adjusting the environmental protection tax on petrol, oil and lubricants,” he said.

For petrol, the government proposes a tax cut from VND2,000 per liter to the floor level of VND1,000. It also proposes a reduction from VND1,500 per liter to the floor level of VND1,000 for air fuel, from VND1,000 per liter to VND500 for diesel, from VND1,000 to VND300 for mazut and lubricant, from VND1,000 to VND300 for grease. Meanwhile, the tax on kerosene stays at VND300 per liter as this is the floor tax level.

According to Chi, with the current consumption level, the tax adjustment policy, when approved and applied, slated for August 1, 2022, collections from the environmental protection tax and VAT would see a decrease of VND7 trillion. 

If counting the reductions in collections from the currently applied environmental protection tax cut, the figure will be VND25.5 trillion. As such, the total budget collection decrease would be VND32.5 trillion this year.

Meanwhile, state budget collections from crude oil price increases and petroleum imports would be VND9.1 trillion higher.

However, this increase cannot make up for the reduction in state budget collections as a result of tax cuts (the environmental protection tax was cut by 50 percent on April 1 and is expected to decrease further, slated for August 1).

Cuts in luxury tax 

Chi added that MOF is considering cuts of some other kinds of taxes, including VAT and luxury tax. The tax cuts will be implemented based on petroleum price fluctuations from now until the end of the year. The optimal goal of the tax adjustments is to stabilize prices.

Deputy Minister of Industry and Trade Do Thang Hai said on June 4 there are three measures to help curb petroleum price increases, including the use of the petrol price stabilization fund, the responsibilities of ministries and branches, and tax adjustments.

Thu Hang