Curbing the rise of petrol prices are essential for Vietnam to contain inflation, stabilize macro-economic conditions, and support economic recovery, for which scrapping excise tax on this product should be considered.

A petrol station in Hanoi. File photo

The Vietnam Chamber of Commerce and Industry (VCCI) gave its view on the draft resolution of the Ministry of Finance (MoF) on revising the tax rates for petroleum products.

The move, however, could only be seen as a long-term solution, as any decision on the cut of excise and value-added taxes for petrol products are subject to the ratification of the National Assembly, with the upcoming session scheduled to take place in late 2022.

In this regard, the VCCI expressed its support for MoF’s suggestion to further cut the environmental protection tax on fuels and gas products, saying such a move could be done right in July under the administration of the National Assembly’s Standing Committee.

VCCI also suggested lowering import tax on petrol products as the decision is under the Government’s authority.

On Vietnam’s commitments in tax management under free trade agreements (FTAs) that the country is a part of, VCCI said they are mostly related to the maximum tariff duty that a country can impose.

“This means Vietnam can still lower the import duty or raise it in case necessary,” it added.

The MoF on April 1 decided to halve the environmental protection tax on fuels from April 1 to VND2,000 per liter but proved futile amid skyrocketing prices of petrol and oil on the global market.

In the past two months, Vietnam’s retail fuel prices have set up a new record five times. On June 21, the prices of RON95-III, the most commonly used petrol product in the country, hit an all-time high of VND32,870 ($1.42) per liter.

Prices of RON95-III to date have risen by VND9,000 and biofuel E5-RON92 by VND8,150 per liter compared to early 2022.

In a discussion session at the NA on June 8, Minister of Finance Ho Duc Phoc said the Government is considering further cuts in taxes on fuel and petrol products in case prices continue the upward trend.