Sunday , August 14 2022

Cut gasoline taxes further to hold price surge: lawmakers


Further tax cuts are needed to contain the surging gasoline prices, which will push the prices of all other goods up, lawmakers have said.

The environment tax on gasoline was halved in early April, but it has proved inadequate to contain the mounting prices, Tran Hoang Ngan, a Ho Chi Minh City representative, said at the ongoing National Assembly session Wednesday.

Gasoline prices have risen by 33 percent this year to a record VND31,570 ($1.36) per liter.

Further rises would badly impact people’s lives since the two pandemic years have taken away their savings, while businesses are being burdened by the high transportation costs, Ngan said.

Several other lawmakers voiced similar concerns and demanded a further reduction in environment, special consumption and value-added taxes on gasoline and diesel.

The special consumption tax and value-added tax together account for 20 percent of the price; taxes and fees account for around 40 percent.

Lawmaker Hoang Van Cuong said tax cuts might reduce the government’s revenues but Vietnam should take this opportunity to increase its crude exports.

Ngan said the short-term reduction in revenues would create long-term benefits, and pointed out that if public spending is hit by inflation, the government’s revenues would decline anyway.

But Minister of Industry and Trade Nguyen Hong Dien told reporters Wednesday that fuel prices in Vietnam are still lower than global rates.

Its gasoline price was $1.39 per liter as of May 30, 4.3 percent lower than the global average of $1.41 and that of Thailand ($1.51), Laos ($1.65), and Singapore ($2.26).

Nevertheless, he said, the ministry would use the tools at its disposal, including taxes, to reduce gasoline prices and succor vulnerable people should prices go too high.

Tran Van Lam, a standing member of the National Assembly’s Economic Committee, said the long-term solution is to increase gasoline national reserves so that domestic prices are not “too sensitive” to global fluctuations.

Current reserves equates to only a few weeks of consumption, and further increases are needed for energy security.

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