Customers suffer from many fuel taxes and fees
  • By Manh Quan | dtinews.vn | March 15, 2016 02:29 PM

Customers are being charged for a wide range of incentive taxes and fees given to enterprises.

Taxes are main cause for Vietnam's high fuel costs. Import tax, special consumption tax, VAT and environment tax account for half of the price of fuel. Without all the taxes, the fuel price would drop to just VND7,000 per litre.

Everyone understands that the government needs a strong state budget to upgrade infrastructure and pay wages for officials and enterprises need profits for further development. But the fuel prices in Vietnam are much higher than many countries. Except for the recent decrease on March 4, most of the time, even when the world fuel dropped, local retail prices have stayed the same.

Diesel import taxes for products imported from ASEAN countries were cut to 5% in 2015 and to 0% from 2016 in accordance with ASEAN Trade in Goods Agreement. But Circular 78 issued by the Ministry of Finance and the Ministry of Industry and Trade in last May stated that the import tax for diesel and mazut is 10%. That means wholesalers import their products with low tax rates but the customers have to pay for high tax rates.

Vietnam imports an average of 400 million litres of diesel from ASEAN countries each month and the wholesalers can earn a monthly profit of VND200bn (USD9.5m). In 2014, Petrolimex reported a loss of VND8bn but in next year, it enjoyed nearly VND2trn.

The Vietnam-Korea Free Trade Agreement, which took effect in December 2015, reduced the import taxes for products from South Korea to 10%, instead of the 20% for products imported from Singapore or Malaysia. Yet the fuel, when it is sold to the customers, is not much cheaper. Customers always get the short end. For some unknown reason, the Ministry of Finance and the Ministry of Industry and Trade ignored various incentives and tax differences last year for enterprises.

On behalf of the government, Vietnam National Oil and Gas Group (PVN) promised to give USD3.5bn in incentives to the investors in the Nghi Son Refinery. PVN then proposed to add this into the prices of products that would be sold directly in front of the refinery gate. This is an unreasonable deal for customers.

It is repeatedly said that fuel prices must provide profits for the government, enterprises and benefit customers alike. The state budget has strong income, enterprises earn huge profits while customers still have to suffer from high prices.

The local retail prices only fell recently because the world fuel prices had dropped to record low. One question is left hanging is that whether enterprises will try to prevent retail prices from hiking up too fast once the world prices pick up again, as they are earning so much now thanks to many taxes and fees.

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