Reduction of petrol and oil environmental protection tax: People and businesses will directly benefit

The Ministry of Finance has completed the draft Resolution of the National Assembly Standing Committee on environmental protection tax rates for gasoline, oil and grease.

Proposal to reduce environmental protection tax for petrol and oil from 700 - 1,000 VND/liter

In the context of the world petroleum market continues to be complicated, the price of crude oil on the world market tends to increase. In order to contribute to stabilizing gasoline prices, curbing inflation, and supporting the recovery and development of production and business, the Ministry of Finance has drafted a resolution of the National Assembly Standing Committee (NASC) on tax rates for environmental protection for gasoline, oil and grease until the end of December 31, 2022.

The Ministry of Finance proposes to adjust the environmental protection tax rate for gasoline, oil and grease to the floor level in the tax bracket until the end of December 31, 2022 as follows: gasoline will be reduced from 2,000 VND/liter to a floor level of 1,000 VND/liter; Flight fuel decreased from 1,500 VND/liter to the floor level of 1,000 VND/liter.

Diesel oil decreased from 1,000 VND/liter to the floor level of 500 VND/liter; fuel oil, lubricant oil reduced from 1,000 VND/liter to the floor level of 300 VND/liter; grease decreased from 1,000 VND/kg to the floor level of 300 VND/kg; kerosene stays at 300 VND/liter because this is the floor in the tax bracket.

From January 1, 2023, the environmental protection tax rate for gasoline, oil and grease will continue to comply with Resolution No. 579/2018/UBTVQH14 of the NASC.

Regarding the implementation effect, if the resolution is issued in July 2022, it is proposed to take effect of the resolution from August 1, 2022 to ensure the implementation. At the same time, the resolution will annul Resolution No. 13/2021/UBTVQH15 dated December 31, 2021 and Resolution No. 18/2022/UBTVQH15 dated March 23, 2022 of the NASC.

Budget revenue decreased by about 1,400 billion VND/month

According to the Ministry of Finance, socioeconomic activities have now recovered to their pre-Covid-19 levels. As a result, the consumption of fuel, oil, and grease in 2022 is predicted to be comparable to the time before the Covid-19 epidemic in 2019. If the proposed reduction policy for the environmental protection tax rate on gasoline, oil, and grease is implemented, the average monthly state budget income reduction (including value-added tax - VAT reduction) is approximately 1,400 billion VND/month.

In the circumstance the resolution is issued in July 2022 and takes effect from August 1, 2022, the estimated reduction in state budget revenue (including VAT reduction) is about VND 7,000 billion. If including the estimated reduction in state budget revenue according to Resolution 18/2022/UBTVQH15 (about 2,661 billion VND/month), the total reduction in average state budget revenue monthly is estimated at 4,061 billion VND/month and the whole year is about 20,305 billion VND.

The Ministry of Finance calculates the impact on state budget revenue due to the increase in crude oil price, it shows if crude oil price is at 110 USD/barrel, the impact on increasing state budget revenue due to increase in crude oil price is about 2,376 billion VND/month. If crude oil price is at 120 USD/barrel, the impact of increasing state budget revenue due to increase in crude oil price is about 2,644 billion VND/month.

CPI will decrease about 0.16%

According to the Ministry of Finance, the impact of the reduction of environmental protection tax on petroleum products on the CPI is reflected through the reduction in domestic retail prices of petrol.

If the resolution takes effect on August 1, 2022, it is predicted the environmental protection tax reduction solution will lead to a 0.16% decrease in the average CPI in 2022. The assumption the retail price of petrol and oil in the country will also reduce from 500 VND/liter to 1,000 VND/liter as the Ministry of Finance proposes environmental protection tax reductions and remain stable in the remaining months of the year 2022

Direct benefit for people and businesses

Petrol is a necessity in people's lives and an input for numerous production industries. Fluctuations in gasoline prices will have a wide-ranging impact on the economy. Reducing the environmental protection tax rate on gasoline, regardless of use, hence, will benefit the economy and the people.

The proposal to reduce the environmental protection tax on gasoline will have a good impact on manufacturing industries as well as businesses that use petroleum as input will benefit more when the policy is issued such as the transportation industry, aviation...

Currently, fuel costs account for about 30% - 40% of the cost structure of air transport; from 35% - 40% of the transportation cost for container trucks, heavy trucks and about 25% for other vehicles. Petrol is an input fuel for most production industries in the economy, especially the lifeline industries such as transportation, electricity, etc.

People will directly benefit from the continuation of the Ministry of Finance's proposal to reduce the environmental protection tax on gasoline, according to economic expert Ngo Tri Long. The reduction of environmental protection tax rates on gasoline, oil, and grease will contribute to the reduction of these items' prices, thereby contributing to the direct and indirect reduction of costs associated with the consumption of gasoline, oil, and grease. This makes more sense when inflation is on the rise, affecting people's lives. Due to the continuous increase in petrol and oil and is currently at the highest level in history, a new price level has been formed. Many goods and services have increased by 5-10%, some have increased by 25-30%, has adversely affected people's lives, especially the disadvantaged, the poor and the low-income people.

Consequently, the reduction of environmental protection tax on gasoline, oil, and grease will reduce production costs and product prices, thereby helping enterprises in enhancing their resilience and expanding their operations.

Source: Government News