Hanoi (VNA) - The Ministry of Finance (MoF) is going ahead with its plan toincrease environmental protection tax on petroleum from the current 1,000-4,000VND to 3,000-8,000 VND per litre, despite objections from other ministries andthe public.

In its second draft of the Law on EnvironmentalProtection Taxes announced last week, the ministry proposed a tax hike onfuel consumption of 3,000-6,000 VND per litre for aviation fuel, 1,500-4,000VND per litre for diesel, 300-2,000 VND per litre for kerosene, and 900-4,000VND per kg for mazut.

If the new tax rate is applied, the price ofgasoline at the pumps will rise to around 22,000 VND (roughly 1 USD) perlitre from the average price at the pump of around 16,000-17,000VND for petrol and 10,000-11,000 VND for diesel and mazut,respectively, analysts said.

The Ministry of Transport (MoT) told the Ministryof Finance (MoF) that Vietnam would apply two petroleum quality standards basedon the Euro 2 and Euro 4 emission standards, suggesting that the MoF set alower environmental protection tax for Euro 4, which cleans emissions fromdiesel cars, to encourage the production of more eco-friendly petroleum.

The Vietnam National Petroleum Group (Petrolimex)said the calculation of environmental protection tax on fuel should encourageE5 bio-fuel consumption.

The Vietnam Petroleum Association (VINPA) hassupported the MoF’s tax proposal, though it has pointed out that the maximumtax of 8,000 VND per litre is too high.

The VINPA has suggested that the MoF hikeenvironmental protection tax from the current 3,000-5,000 VND per litre forpetrol; from 1,500-3,000 VND per litre for diesel; from 3,000-5,000 VND perlitre for aviation fuel; and from 900-3,000 VND per kg for mazut.

Earlier, the Ministry of Foreign Affairs said theMoF should carefully consider its tax hike proposal as local businesses, whichare already paying many kinds of taxes and fees, will be further hit. It askedthe MoF to do an assessment on the impact of the tax hike on the economy and people’slives.

The draft law is scheduled to be submitted to theFinance-State Budget Committee of the National Assembly (NA) for considerationthis month. It will be submitted to the NA Standing Committee in August and toNA deputies in September. The NA will review the draft law for approval inOctober.

MoF’s deputy minister Tran Xuan Ha said the taxhike is one of the measures to better manage petroleum products while limitingsmuggling. Its impact on businesses, people and inflation will be calculated,he added.

Last year, around 42.3 trillion VND (1.9 billionUSD) was collected in environmental protection tax, of which petroleum raked in40.2 trillion VND.-VNA