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Using tax for right purposes

16/3/15

World oil prices dropped sharply in recent time has caused significant impact to the state budget revenue. Not only that, the state budget revenues continued to press upon Vietnamese managers when Vietnam is implementing the tax cut oil imports in accordance with the international commitments (Vietnam with ASEAN, ASEAN with China and ASEAN with Korea...).
To offset revenue, Standing Committee of the National Assembly has agreed and approved the Report of the Government on tax increases for environmental protection to petrol from 1,000 to 3,000 VND/liter (increased 2,000 VND); diesel oil increased from 500 to 1,500 VND/liter (increased 1,000); mazut oil, lubricants and grease increased from 300 to 900 VND/liter depending on type and is applicable from the next May 1st.
According to calculations by the Government, total tax revenue for environmental protection petrol is expected in 2015 under the adjustment plan reaches 35,579.8 billion/year (an increase of approximately 23,719.8 billion), secures about 84% decreased State budget revenues by implementing cutting import tariffs in accordance with the international commitments and adjust the preferential import tax rate equal to the current applied rates within ASEAN.
Representatives of the Ministry of Finance confirmed that the basic environmental protection tax increase will not affect the retail price of petrol in the country and enterprises as well as people still get benefit when world gas and oil prices decreased. In addition, the tax increase for will ensure environmental protection in accordance with the retail price of petrol in the region, contributing to restrict smuggling petrol because petrol prices in Vietnam (including plus environmental protection tax) is lower than some countries in the region such as Cambodia, Cambodia, Thailand, China... However, it made many people worried and put a question that: In the coming time, when the price of crude oil in the world shows signs of recovery, the difference between the base price and stabilization fund plus tax increase for environmental protection, whether petrol price will increase?
According to economic experts, the petrol price spike is unlikely to happen. Because the agency will allow simultaneous use of two tools such as price increases and the rest partially offset by the use of price stabilization fund. Most evident is the operator increase of petrol price on March 11. If we do not the fund but only raise prices, it will so high, Therefore, the adjustment by using two methods at the same time is quite reasonable in this context.
On the other hand, when we reduce import tariffs from 35% to 20% according to the international commitments that Vietnam realized from January 1st 2015, tax increase for environmental protection can also be understood as part of the state budget deficit that we have been facing fluctuations in world oil prices falling continuously in the last time. However, it should be realistic that we can not reduce this because an increase of the other because each type of tax has a different purpose. In particular, the environmental protection is urgent at present. In addition, the environmental protection tax increases for gasoline, and oil requires logical calculation and route. If excessive growth will impact the cost of inputs and then the purchasing power of the population will decrease, negatively impact on production and certainly affect significant growth of the economy.
The reduction of import duties and taxes increase for environmental protection to petrol do not affect the calculation of basic price and in fact retail price of petrol will be adjusted in accordance with market rules. In the trend of world oil prices recovering, the inevitable State and the relevant authorities will be adjust to ensure harmonized tripartite benefits: State - businesses and consumers.


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