Vietnam postpones plans to increase fuel tax

Top legislator Nguyen Thi Kim Ngan on Thursday approved the delay after listening to experts’ concerns that the tax will affect Vietnam’s goal to contain inflation below four percent this year.

“Although increasing the environmental tax on fuel will bring trillions of Vietnamese dong to the state budget,” there is uncertainty in price changes for the rest of the year,” Ngan said.

As the trade tension between the U.S. and China has been escalating, and the fact that stormy weather during the second half of the year often increase commodity prices in Vietnam, it would be more appropriate to raise the fuel tax at a later time, said Nguyen Van Giau, chairman of the External Affairs Committee of the National Assembly.

Giau proposed that the tax be imposed two months after the next Vietnamese Lunar New Year, which will fall on February 2019.

Earlier this year, Vietnam’s Finance Ministry 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, which is the highest rate permitted in Vietnam, has met with strong public opposition. But the ministry defended its proposal by saying that it was supported by many ministries and departments, and that fuel prices in Vietnam is still lower than in 120 other economies in the world.

The proposed 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, it said.

The Standing Committee of the National Assembly will discuss the proposal again in August.