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| A petrol station at Thai Thinh street, Dong Da district, Hanoi__Photo: VNA |
Nation is scheduled to impose an excise tax on petrol, or gasoline, as part of its strategy to fulfil environmental commitments, Finance Minister Nguyen Van Thang said on May 9 at the ongoing 9th session of the 15th National Assembly that focused on the amended draft Law on Excise Tax.
Environmental pollution is on the rise, and without imposing a tax on petrol, it will be difficult to change consumer behavior, the minister said.
He emphasized that transitioning to eco-friendly alternatives, such as electric vehicles and public transportation, requires comprehensive policies, including fuel taxation.
Vietnam’s commitment to achieving net-zero emissions by 2050, as pledged by the Prime Minister at COP26, underpins this move. While acknowledging the country’s economic challenges, Minister Thang said Vietnam must align with international practices, noting that many developed nations impose various fuel-related levies such as CO₂ taxes and fees.
According to the minister, while environmental protection fees help fund environment-related projects, the excise tax primarily aims to influence consumer behavior and raise budget revenue.
“Implementing both taxes complements each other and aligns with Vietnam’s climate goals,” he said, adding that Vietnam’s fuel tax rates remain lower than those in many other countries.
The amended law also proposes steeper taxes on products harmful to public health. For alcohol over 20 percent as well as beer, the Government suggests an annual 5 percent tax increase. Specifically, from 2027 to 2031, the tax rate for this item will increase from 70 percent to 90 percent.
However, amid economic pressures and a national growth target of over 8 percent, the National Assembly’s Economic and Financial Committee recommends a more moderate approach, still beginning in 2027.
Sugary soft drinks are also included in the new taxable list, with an 8 percent tax starting in 2027 and increasing to 10 percent by 2028.
The goal on imposing this tax is to combat rising rates of obesity and diseases related to high sugar consumption. The Government is studying international models and expanding the taxable product list as necessary.
Meanwhile, pickup trucks will see a gradual increase in tax of 3 percent annually starting from 2027, rather than an immediate hike to 60 percent, the rate applied to under-9-seat passenger cars, as initially proposed. This revision aims to support domestic businesses and maintain a favourable investment environment.
Regarding the taxation of air conditioners, the draft law proposes applying the excise tax to units with capacities between 18,000 and 90,000 BTU.
The minister emphasized that taxation is not solely aimed at reducing electricity consumption.
He also noted that the Prime Minister issued Decision 496/QD-TTg of June 11, 2024, requiring that by 2045, household and commercial air conditioners using HCFCs and HFCs — substances harmful to the ozone layer — must be phased out, with production and imports prohibited.
Hence, imposing an excise tax on air conditioners remains necessary, particularly as the country seeks to discourage energy-intensive appliances.
However, the minister said high taxes may not significantly curb demand, since air conditioning remains essential for health and daily living in many regions.- (VLLF)
