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Tax policy to blame for Vietnam’s costly fuel prices: data

With domestic prices carrying so many taxes and fees, consumers in Vietnam will never be able to buy cheap fuel despite global prices falling.

With domestic prices carrying so many taxes and fees, consumers in Vietnam will never be able to buy cheap fuel despite global prices falling.
With domestic prices carrying so many taxes and fees, consumers in Vietnam will never be able to buy cheap fuel despite global prices falling.

Taxes and fees now make up as much as 50.4 percent of the retail gasoline price in the Southeast Asian country, according to data from the Vietnam Petroleum Association.

In Vietnam, petrol currently sells at VND18,130 (US$0.81) a liter to the consumer, but with all extra costs excluded, the real import price is only VND9,000 a liter.

The Southeast Asian country imports around 70 percent of its fuel demand, mostly from Singapore.

The import price of A92 petrol in the first eight months of this year averaged $70.32 a barrel, down 35 percent from the same period last year.

But the average retail price in the same period in Vietnam only declined 20 percent from a year earlier.

The current retail price of A92 petrol is also VND250 a liter higher than the rate in late 2014.

“It is obvious that retail prices have not decreased as much as they should have done,” Trinh Quang Khanh, standing deputy chairman of the Vietnam Petroleum Association, said.

Nguyen Van Tiu, general director of Hanoi-based fuel firm Tu Luc 1, said the current tax and fee policy is to blame.

A liter of gasoline is currently subject to four types of taxes and three different fees.

The taxes include the VND3,000 a liter environmental protection tax, the 20 percent import duty, the 10 percent excise tax, and the 10 percent value-added tax.

The four taxes are collectively worth VND7,460, and the fees total more than VND1,600.

This means consumers have to pay more than VND9,000 to the state budget and fuel businesses on every liter of gasoline they buy.

Such a tax and fee policy for fuel has prevented consumers in Vietnam from enjoying cheap prices whenever the global rates go down.

“Chances to cut fuel prices are always missed in Vietnam and it is consumers who suffer the consequences,” economic expert Ngo Tri Long said.