NA Standing Committee delayed voting on environmental tax hike proposal

Viet Nam News

HÀ NỘI — The National Assembly (NA) Standing Committee postponed a vote on a proposal made by the Finance Ministry to hike the environmental protection tax yesterday, urging serious consideration of its economic impacts.

Presenting the bill, Minister of Finance Đinh Tiến Dũng said that the current socio-economic situation made it necessary to adjust environmental protection duties on a number of products to better reflect the amount of pollution they caused and to fulfill Việt Nam’s commitments to environmental protection.”

Dũng claimed that the tax hike would bring in VNĐ15.2 trillion (US$657 million) to the State budget, which would be used for socio-economic development purposes, including environmental protection projects.

The tax hike would promote “economic and efficient use of energy and natural resources, and production and consumption of environmental-friendly commodities,” Dũng said.

Regarding public concerns that prices would rise since petrol remained the primary fuel used in the country, Dũng said out that the increase would only stretch the country’s 2018 Consumer Price Index (CPI) by a marginal 0.11-0.15 per cent.

However, several members of the committee urged serious consideration of the proposed petrol tax hike, since CPI in the first six months of 2018 had increased by 3.29 per cent – already close to the NA’s ceiling target of 4 per cent for the whole year.

Raising tax on a ‘sensitive’ product such as petrol would upend business activities and public life, committee members added.

Similarly, the 100 per cent increase in tax on mazut, a heavy oil still widely used as fuel at production plants, was also likely to affect businesses.

“Just a month ago, the Prime Minister said the Government was committed to maintaining stable prices for public services and basic amenities such as electricity in the last half of 2018, and now the Government has proposed an increase to the environmental tax, which in turn, would lead to an increase in the price of commodities,” Nguyễn Văn Giàu, chairman of the NA External Relations Committee, said at the meeting.

Nguyễn Đức Hải, chairman of the Finance and Budget Committee, the body that reviewed the proposal, said that while the committee agreed with the bill’s intent, the Government must deliver a clearer report on its economic impacts and listen to feedback from experts and citizens, especially those most vulnerable to the tax hike.

NA Chairwoman Nguyễn Thị Kim Ngân said that “a marginal inflation rate would be worth it if the tax hike generates considerable funds to be used for environmental protection projects.”

However, if the proposed hike went into effect, the Government must prioritise spending on environmental works such as climate change adaptation, preventing landslides and flooding, and reforestation programmes, she said.

In addition, she asked customs, tax and financial oversight authorities to step up inspections and monitor actual oil production costs. — VNS