No fuel tax hike before 2020, minister assures
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Vietnam won’t increase its fuel tax before 2020, Finance Minister Dinh Tien Dung has directed.
Dung has ordered a proposal to increase environmental tax on petrol and diesel to be removed from next year’s plan.
Earlier this year, the ministry had proposed that the environmental tax on petrol and diesel be increased by 33 percent, or VND4,000 (17 cents) per liter for petrol and VND2,000 per liter for diesel.
The proposed hike, the highest permitted in Vietnam, was met with strong public opposition.
But the ministry had defended its proposal by saying that the tax can bring VND57.3 trillion ($2.4 billion) each year to state coffers, an annual increase of VND15.7 trillion ($650 million) from current collections.
Last month, top legislator Nguyen Thi Kim Ngan approved the delay after listening to experts’ say that the tax will affect Vietnam’s goal of containing inflation below four percent this year.
Questions & Answers
Q.What was the previous proposal for increasing the environmental tax on petrol and diesel?
What was the previous proposal for increasing the environmental tax on petrol and diesel?
The ministry had proposed increasing the environmental tax on petrol by 33 percent, or VND4,000 per litre, and diesel by VND2,000 per litre. This was the highest permitted increase in Vietnam.
Q.Why did the Finance Ministry initially defend its proposal to increase fuel tax?
Why did the Finance Ministry initially defend its proposal to increase fuel tax?
The ministry defended its proposal by stating the tax could generate VND57.3 trillion ($2.4 billion) annually for state coffers. This represented an annual increase of VND15.7 trillion ($650 million) from existing collections.
Q.What was the main reason cited for delaying the environmental tax increase?
What was the main reason cited for delaying the environmental tax increase?
The delay was approved after experts suggested the tax hike could hinder Vietnam's objective of keeping inflation below four percent this year. Top legislator Nguyen Thi Kim Ngan approved this delay last month.
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