How are funds from environmental taxes and fees spent?

Every attempt to raise environmental taxes and fees encounters opposition from the public because they don't know how the money is spent.

The common principle of all types of environmental taxes is ‘polluters have to pay’ to cover the expenses spent to improve pollution situation. However, many people still find it difficult to understand the differences and efficiency of each type of tax.

How are funds from environmental taxes and fees spent?



While the environmental protection tax is indirect tax targeting the products that cause adverse effects to the environment (users have to pay this tax), the environmental protection fee is a direct charge imposed on polluting sources in production (producers have to pay this tax).

The common principle of all types of environmental taxes is ‘polluters have to pay’ to cover the expenses spent to improve pollution situation. However, many people still find it difficult to understand the differences and efficiency of each type of tax.

The purposes of the environmental protection tax are creating sources of revenue for the state budget and restricting the use of polluting goods.

 

Under the Environmental Protection Tax, there are eight items subject to the tax, including oil, petrol and lubricants; coal; HCFC solution; plastic bags; and 4 types of drugs that are of restricted use, including herbicides, termiticides, forest preservatives and warehouse disinfectants.


Meanwhile, environmental protection fees aim to create revenues to cover the costs of environment management, protection and investment and to prevent polluters from discharging treatable pollutants into the environment.

There are currently three types of environment protection fees applied to wastewater, solid waste and mining activities.

The National Assembly’s annual budget spending estimates and Ministry of Finance’s reports in 2012-2016 showed that roughly VND26.3 trillion is spent a year on environmental protection tasks. The figure is higher than the revenue from environmental protection tax of VND21.2 trillion.

However, analysts said the spending is unreasonable and ineffective, while little money has been invested in large high-technology projects.

Meanwhile, environmental protection fees are not a big source of revenue. Over VND2.1 trillion worth of environment protection fees from wastewater was collected in 2017.

Local authorities complained that the revenue was not high enough to cover the expenses of building and maintaining sluices for wastewater drainage alone, not to mention wastewater treatment.

Experts pointed out a big problem in spending money: the environmental protection fee from wastewater may not be used to fix water pollution problems, but it may be used for soil, solid waste or air pollution.

Hoang Duong Tung, former Deputy General Director of the Environment Directorate General, said the regulations need to be stricter to be sure that revenue from fees can be used for the right purposes.

The Ministry of Finance is drafting an e amended decree on collecting environmental protection fee from emissions. Some groups of lobbyists for clean air have proposed settng up a regulation that at least 70 percent of collections from the fee will be used directly for works to minimize air pollution. 

Thien Nhien

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