Preparing to consider reducing environmental protection tax on gasoline and oil

The reduction of environmental protection tax on gasoline can be implemented from April 2022. (Source: Investment Newspaper)

Earlier, on March 16, after an interrogation session with Minister of Industry and Trade Nguyen Hong Dien, National Assembly Chairman Vuong Dinh Hue asked the Government to soon submit to the National Assembly’s agencies for verification and to the Standing Committee of the National Assembly. The National Assembly considers and approves the Resolution on reducing environmental tax on gasoline right at the second session of the 9th session this March, for implementation from April 2022.

According to the meeting schedule, tomorrow afternoon (April 23), this content will be considered by the National Assembly Standing Committee.

In the report, the Government proposed the National Assembly Standing Committee to adjust the environmental protection tax rate for gasoline, oil and grease from the effective date of the Resolution to the end of December 31, 2022.

Specifically, gasoline (except ethanol): reduced by 2,000 VND/liter, from 4,000 VND/liter to 2,000 VND/liter (50% reduction compared to the current level).

Diesel, fuel oil, lubricants: Reduced by 1,000 VND/liter, from 2,000 VND/liter to 1,000 VND/liter (50% reduction compared to the current level).

Grease: Reduce 1,000 VND/kg, from 2,000 VND/kg to 1,000 VND/kg (50% reduction compared to current level).

Kerosene: Reduced by 700 VND/liter, from 1,000 VND/liter to the floor level of 300 VND/liter.

With regard to jet fuel, the report clearly states that because the environmental protection tax rate for jet fuel has been reduced from August 1, 2020 to the end of December 31, 2022 (specifically: from January 1, 2020). From August 1, 2020 to the end of December 31, 2021, a 30% reduction from 3,000 VND/liter to 2,100 VND/liter; from January 1, 2022 to the end of December 31, 2022, a 50% reduction from 3,000 VND/liter to 1,500 VND/liter). Accordingly, it is proposed to keep the current level, which is being reduced at 1,500 VND/liter according to Resolution No. 13/2021/UBTVQH15 dated December 31, 2021 of the UBTVQH.

Assessing the impact of the above proposal, the Government calculates, assuming that the Resolution takes effect from April 1, 2022 and the domestic retail price of petrol in the remaining 9 months of 2022 is stable like the price at In the adjustment period on March 11, 2022, the reduction of environmental protection tax on gasoline, oil and grease will help reduce the average CPI in 2022 by an estimated 0.76% – 0.85%.

However, because the environmental protection tax is an absolute number and the CPI is a relative number, the impact of the tax reduction on the CPI depends on the fluctuation of the retail price of petrol in each operating period. The impact of this tax reduction on CPI gradually decreases as petrol prices continue to increase compared to current levels; decrease by 0.61% CPI if petrol price increases by 10% compared to current level; reduce CPI by 0.56% if petrol price increases by 20% compared to current level; decrease by 0.52% CPI if petrol price increases by 30% compared to current level.

The tax adjustment, according to the Government, also contributes to ensuring the harmony of interests between people, businesses and the state when crude oil prices are high.

According to the Government, in the past years, in the structure of state budget revenue, revenue from crude oil has always accounted for a high proportion. When crude oil prices increase, the state budget revenue from crude oil increases. Therefore, the reduction of environmental protection tax on gasoline, oil and grease when gasoline prices increase represents the share of benefits of the state with people and businesses.

Contributing to reducing production costs of enterprises and saving consumption costs for people is also the impact stated in the Government’s report.

Petroleum is an input fuel for most production industries, especially the lifeblood of the economy such as transportation, electricity, etc. The reduction of environmental protection tax for gasoline, oil, grease will contribute to reduce production costs, lower product costs; and at the same time contribute to reducing consumption costs of gasoline, oil and grease for the people, the Government recognizes.

Regarding the environment and international commitments, the report clearly states that, at present, the State and Government have decided to move the activities of the economy – society to the new normal. All production and business activities of businesses and people are also gradually returning to the normal state like before the epidemic.

Accordingly, in the coming time, the domestic demand for gasoline, oil and grease is likely to increase more than at the time of the epidemic (in 2020, in 2021) and may increase equivalent to the time of the epidemic. before the outbreak (in 2019). The main reason for the increase in consumption of gasoline, oil and grease is due to the needs of the economy when transitioning to a new normal after the Covid-19 epidemic.

However, in the short term, consumption of gasoline, oil and grease is unlikely to be higher than before the epidemic because the socio-economic situation still faces many potential risks due to the epidemic situation. disease is still complicated. Therefore, basically, the reduction of the environmental protection tax rate on gasoline in 2022 will not affect the environmental protection objective of the environmental protection tax policy due to the increase in gasoline consumption. won’t be too big.

At the same time, within the framework of FTAs ​​and multilateral forums with the participation of Vietnam, there are currently no mandatory commitments related to the control of petroleum consumption. The reduction of environmental protection tax on gasoline, oil and grease does not violate international commitments on the environment to which Vietnam is a member (including the Kyoto Protocol on climate change, the United Nations Framework Convention on Climate Change). United Nations on Climate Change); at the same time, it does not increase greenhouse gas emissions and does not affect the implementation progress of the commitment to bring net emissions to “zero” by 2050 due to the reduction of environmental protection tax rates on gasoline, oil, grease is valid until the end of December 31, 2022.