The move is in a bid to ease pollution and address budgetry issues.
With the aim to reduce pollution and pay off public debt, Vietnam is planning on raising taxes on fuels beginning July, though it has been warned that the move could increase inflation and harm businesses in the country. The environment tax on fuel is planned to be increased by 33.3 percent to 4,000 dong ($0.1754) per liter, with taxes on diesel fuel, coal and lubricants also set to increase.
Deputy Finance Minister Vu Thi Mai said, “The planned tax hike is part of a move to restructure the state budget with an aim to ensure the safety and stability of the national finance system.” Vietnam’s strategy to limit products that trigger pollution is also part of the tax hike.
Vietnam is facing a pollution problem as Southeast Asia’s fastest-growing economy. According to a January report by the Green Innovation and Development Centre, the capital, Hanoi, enjoyed little more than one month of clean air last year. Public debt must be kept below 65 percent of its gross domestic product by the government and the new tax will be used to pay down the debt.
That the higher tax will raise costs for businesses and consumers are concerns that have come up though. “This would definitely hit businesses as they would have to face higher input costs, leaving them less competitive,” said Hanoi-based economist Cao Si Kiem, a former governor of the State Bank of Vietnam.
As Vietnam integrates further into the global market, the tax increase would compensate for the decline in import and export tax revenues. A dozen free trade agreements have been signed by the country that will remove or reduce taxes on several imports.
PetrolWorld notes that the Asia Fuel Retail Conference being held in Kuala Lumpur on 26-27 June will address the latest efforts in South East Asia on deregulation. However it will also present Eco friendly solutions for the fuel service station networks of South East Asia. . Source: Reuters & PW KL PWKD06042018
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