Environmental protection tax opposed by some economists
VietNamNet Bridge - The Ministry of Finance (MOF) has proposed raising the environmental protection tax to offset the decrease in tax collection caused by tariff cuts under foreign trade agreements (FTAs).


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Research based on the I/O (industrial organization) model found that greenhouse gas (GHG) emissions in Vietnam has reached an alarming level, especially in the processing/manufacturing industry and production of goods for export.

However, GHG emissions have been blamed on transport activities and the high number of cars and motorbikes.

MOF has proposed raising environmental protection taxes on oil and petroleum products, from VND3,000 (13 US cents) to the ceiling level of VND4,000 (17 cents) per liter, commencing on July 1, 2018.

A report from the Ministry of Natural Resources and the Environment (MONRE) pointed out that the processing/manufacturing industries are the biggest sources of GHG. 

The two industries produce a GHG volume which is three times higher than the average level. 

The other culprits are construction and civil engineering, which is 2.4 times higher, and agriculture – forestry – aquaculture, which is 2.1 times higher.

MONRE (the Ministry of  Natural resources and the Environment) estimated that the GHG volume in Vietnam was 247 million tons in 2010 and would surge to 300 million in 2012, 423 million tons in 2016, and reach 466 million tons by 2020. However, the GHG volume reached 423 million in 2016.

The GHG volume in the 2010-2016 period grew by 8 percent on average, a growth rate even higher than the average GDP growth of 6.2 percent in the same period.

MONRE estimated that the GHG volume in Vietnam was 247 million tons in 2010 and would surge to 300 million in 2012, 423 million tons in 2016, and reach 466 million tons by 2020. However, the GHG volume reached 423 million in 2016.

The production of goods for export generates 50 percent of total GHG emissions.

Exports make a great contribution to economic growth. However, economists have pointed out that most exports are from foreign-invested enterprises. Production activities from these enterprises generate a high volume of GHG.

“This doesn’t seem to support the current policy on encouraging the production of goods for export by offering tax and loan incentives, because Vietnamese have to bear both a heavy tax burden and environmental protection tax just to benefit foreign investors,” Bui Trinh, a respected analyst, said in Thoi Bao Kinh Te Sai Gon. 

The MOF’s plan to raise taxes is not advocated by many economists.

Dang Dinh Dao, former head of the Institute Economics & Development Studies, said  the reasons cited by MOF for the tax increase plan area is unreasonable, and it is not the right time to raise the environmental protection tax.

“MOF is trying to impose an even higher tax when Vietnamese businesses are already burdened with taxes,” he said.


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Mai Thanh

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