VietNamNet Bridge – Three big petroleum importers are planning to raise the petrol price once more by 1100-1200 dong per liter. The price increases, if approved, would “throw more oil into the fire” and lead to the high inflation.

The three are the Dong Thap Petroleum Company Ltd, Petect and Saigon Petro. If the plans come true, the petrol price would increase three times in the last month by 3000 dong per liter in total.

The production costs of the enterprises in the eight production fields which consume much petrol and oil may increase by 1-5 percent after the three time price increase.

Collecting tax for the budget – the top priority?

Under the Decree No. 84 on the petroleum price management, enterprises can adjust the retail prices themselves, if the basic price increases by up to seven percent. Meanwhile, the State would apply suitable measures to stabilize the domestic retail prices.

When the petrol price was raised on August 13, Nguyen Manh Hung, Chair of the Vietnam Automobile Transport Association, said that the Ministry of Finance should use other tools to stabilize the prices instead of approving the proposals by importers to raise the retail prices.

“I think that it would be better to slash the import tariff in order to minimize the bad impacts on the society’s life,” he said.

Experts also think that the state should think of cutting down some kinds of taxes and fees to pave the way for distributors to ease the retail prices.

At present, a liter of petrol and oil has to bear 6000-8000 dong worth of taxes and fees, including the import tax, luxury tax, value added tax, environment protection tax, petrol price stabilization fund and other expenses.

They have pointed out that people now have to pay 7750 dong worth of taxes and fees for every liter of petrol and oil they buy, if considering the average import price in the last 30 days.

Meanwhile, the sum of money would be up to 7900 dong per liter, if considering the average import price in the last 20 days. At present, petrol imports bear the import tariff of 12 percent.

The experts have also said if the import tariff is lowered by two percent, the petrol price increase on August 13 would have been lower by 400 dong per liter.

Why didn’t the Ministry of Finance consider lowering the import tariff to help reduce the retail price and ease the heavy burden on the consumers? Is this because the ministry fears that the lower tariffs would lead to the lower sums of money to be collected to the state budget?

Curbing inflation – the Number two?

The General Statistics Office on August 24 announced that the consumer price index (CPI) in August increased by 0.63 percent over the previous month, the highest increase since Tet, stressing that the petroleum price increases have pushed the index up.

The petrol price has increased by 12 percent over the last month. If following the Ministry of Finance’s formula, if the petroleum price increases by 12 percent, this would make the inflation rate increase by 1.5-2 percent. Besides, the price increase would have domino effects on the production fields.

Hung said passenger transport enterprises prove to be the biggest sufferers from the petrol price increases. They did not dare to raise the transportation service fee, even though the petrol and oil prices have been increasing sharply. However, they would have to reconsider the fees, if the petrol prices keep rising.

The government always highlights the macroeconomic stability as the top priority task. However, the efforts to curb inflation made so far this year may be erased by the continued petrol price increases.

Source: Lao dong