The Government has suggested the Minister of Finance (MoF) consider further tariff and tax cuts related to petroleum products, especially those that would result in increased operational costs for businesses and people.

The ministry's proposal should be sent to the Government before July 30, according to a governmental document signed by Deputy Prime Minister Le Minh Khai recently.

A gas station in Tran Hung Dao Street, Hanoi. Photo: Pham Hung

“The cut is necessary to further stabilize market prices of strategic commodities, contributing to containing inflation and supporting the monetary policy in short- and medium term,” noted the document.

In late June, the MoF proposed excise and value-added tax cuts for petroleum products amid rising prices that were putting pressure on the Government’s efforts to curb inflationary pressure.

Such cut, however, has not materialized, as petrol prices declined by a combined VND6,000 after three price adjustment periods in July, along with concern that cheaper petrol prices in Vietnam may lead to oil smuggling to neighboring countries.

At present, the retail prices of Vietnam’s petrol prices comprise four taxes, including the import duty, environmental protection tax, excise, and value-added taxes, for which taxes would make up 20-23% of the prices for petrol products, and 11% for diesel.

The MoF last week suggested halving the most favored nation (MFN) import duty to 10%, however, experts noted the move would encourage local traders to diversify the import market rather than cut retail prices.

A cut in excise and value-added taxes, therefore, would make a greater impact.

The Ministry of Industry and Trade forecast the domestic retail prices of petrol products would stay volatile from now until late 2022, due to the uncertain global economic situation.

For the upcoming two months, the prices may hover around VND31,000 (US$1.33) per liter and later down to VND24,000 ($1.03) in the fourth quarter.