Responding to a proposal sent to the National Assembly session by some voters to eliminate the special consumption tax (SCT) on gasoline, the Ministry of Finance stated that excise tax collection is appropriate according to international practices, contributing to reducing emissions to the environment. Gasoline is also a nonrenewable fuel that must be used sparingly, so many countries levy an excise tax on this good.

Using the environmental protection tax tool to reduce gasoline prices.

Voters said that the current world is in a difficult situation, and Vietnam is in danger of experiencing high inflation. To minimize the effects of the global economic downturn, voters suggested that the Government must have solutions to maintain macroeconomic stability, develop agriculture, ensure food security, and create jobs for workers. Voters suggested the Government reduce and eliminate excise taxes and stabilize petroleum supply to serve people’s life nationwide.

The Ministry of Finance stated that by the Law on SCT, SCT is only collected for all types of gasoline, not collecting SCT for oil. The SCT tax rate for gasoline is 10%, 8% for E5, and 7% for E10. The SCT Law makes no provision for tax reductions or exemptions for goods and services subject to SCT. Regarding authority, the carry-out of the SCT tax rate adjustment rate under the jurisdiction of the National Assembly should be submitted to the National Assembly for consideration and decision.

Relating the petition for the reduction of SCT for petrol, at the 4th session of the XV National Assembly, based on the direction of the Government, the Prime Minister and the Ministry of Finance submitted to the National Assembly a method to reduce the SCT for Gasoline and value-added tax (VAT) foe petroleum.

However, on 11/11/2022, the Standing Committee of the National Assembly issued Report No. 362/BC-UBTVQH15 on the acquisition and explanation of the assessment of state budget implementation in 2022, attending state budget mathematics in 2023, and draft resolutions on state budget estimates in 2023, in which the Standing Committee expressed the following opinion:

“The forecast of the world crude oil price trend in 2023 is lower than the oil prices in 2022; along with the current positive indicators of the macroeconomic domestic economy, the design of a “Reserve” mechanism in managing domestic gasoline prices through SCT and VAT is non-necessary. Furthermore, in 2023, in addition to the measures to run the domestic petroleum market, there is still room to use environmental protection tax tools as implemented in 2022. Therefore, the Standing Committee requested that the National Assembly permit not to supplement this content in the draft resolution”.

Most countries collect SCT for gasoline.

Based on the recommendations of the above-mentioned the Standing Committee of the National Assembly and the socioeconomic context, the Ministry of Finance issued Official Letter No. 11881/BTC -CST on November 15, 2022, requesting permission to suspend the development Resolution of the National Assembly on the reduction of SCT and VAT on petroleum.

At the same, under the Prime Minister’s directive, the Ministry of Finance has submitted to the Government and Standing Committee of the National Assembly to issue Resolution No. 30/2022/UBTVQH15 on environmental protection tax for gasoline, oil, and grease. Accordingly, from January 1, 2023, to December 31, 2023, the environmental protection tax rate for gasoline (except ethanol) is 2,000 VND/liter; flight fuel is 1,000 VND/liter, and diesel oil is 1,000 VND/liter.

Concerning the petition to repeal the SCT for gasoline, according to the Ministry of Finance, the SCT is the tax collection of goods and services that the State does not encourage consumption (tobacco, alcohol, beer,…), that must be economical (fossil-based gasoline) and groups of goods and services consumed by high-income people who need to regulate income (cars, aircraft, yachts, golf,. ..).Gasoline is a fossil-based, non-renewable fuel that must be utilized sparingly so that most countries collect excise taxes on it, for example, France, Germany, Italy, the United Kingdom, Korea, Australia, Thailand, Singapore, China, Cambodia, Laos…

In Vietnamese, gasoline has been subject to an excise tax since 1995. This regulation is under the objectives of the excise tax and international practices. Additionally, in the context of environmental pollution and climate change are global issues, the Government of Vietnam’s commitment at COP26 to achieve net emissions of “zero” by 2050, in conjunction with other solutions, the current collection of excise tax on gasoline is appropriate, contributing to emissions reduction.

Minh Anh (TBTCO)