Chairman of the National Assembly’s Economic Committee stated “countermeasures” on taxes to cope with “hot” rising oil prices

Chairman of the Economic Committee of the National Assembly Vu Hong Thanh presented an inspection report on the socio-economic situation at the opening session of the 3rd session of the 15th National Assembly on the morning of May 23.

Average oil price in 2022 is forecasted to increase by 20-30 USD, inflation pressure

At the inspection report, Chairman of the National Assembly’s Economic Committee said that the upward trend in basic commodity prices, combined with the impact of the escalating Russia-Ukraine conflict, caused energy prices to rise to a record high.

All international organizations forecast the scenario that the average oil price in 2022 will increase by about 20-30 USD (ie about 30-40%, from the average of 69 USD/barrel in 2021 to the average of 90-100 USD in 2021. USD/barrel in 2022). Golman Sachs Bank forecasts that oil prices may rise to $125/barrel in the third quarter of 2022.

Accordingly, an increase in gasoline prices will greatly affect domestic production costs, putting pressure on inflation in 2022.

Specifically, according to statistics, CPI in April increased by 2.09% compared to the end of 2021, nearly 2 times higher than the same period in 2018-2021. Many argue that the inflation target below 4% is unlikely to be achieved.

According to the National Financial Supervisory Commission’s assessment, compared with the increase in world commodity prices in the first months of 2022, domestic inflation increased more slowly thanks to the fact that food prices were always negative from October 2021 to October 2021. In March 2022 (this group of goods has a weight of 22.6%, much higher than the level of 9.37% of the transportation group in the CPI basket), the slowest recovery in consumption is service consumption.

However, food prices are tending to be less negative and likely to be positive again in the coming months; the economy continues its recovery trend; Commodity prices in the world fluctuated complicatedly, making the inflation risk in the coming time impossible to be subjective.

The head of the National Assembly’s Economic Committee emphasized that supply chain inflation is the biggest pressure group, because our country’s economy has a large openness and production depends heavily on imported raw materials. . Therefore, the Economic Committee recommends that the Government specify the causes and main factors that increase inflation for effective control.

Study the scenario of continuing to reduce excise tax to cope with large fluctuations in world oil prices

More specifically about the petroleum market, Chairman Vu Hong Thanh said that petroleum products in the first quarter of 2022 had many fluctuations. The domestic petroleum supply was greatly affected by the fact that Nghi Son Oil Refinery (accounting for 35-40% of total supply) sharply reduced its production capacity and did not supply enough gasoline output to the market as previously reported. commit to and sign contracts with key traders of petrol and oil and fail to supply enough petroleum output to the market.

Besides, the petrol price structure is still not reasonable (taxes, fees and basic price components, loss norms, norm business expenses, normed profits…) make reasonable adjustments, ensuring the harmony of interests of related parties.

Meanwhile, the source of petroleum from imports faced difficulties due to the sharp increase in prices and great competition when the supply was interrupted due to the armed conflict between Russia and Ukraine.

In the face of complicated market developments and a sharp increase in gasoline prices, the National Assembly Standing Committee issued Resolution No. 18/2022/UBTVQH15 dated March 23, 2022 on environmental protection tax rates for gasoline and oil. in order and shortened procedure.

Specifically, reducing the environmental protection tax rate by 50% for gasoline (except ethanol), diesel oil, fuel oil, lubricants and grease from April 1, 2022 to the end of December 31, 2022; 70% reduction of environmental protection tax on kerosene from April 1, 2022 to the end of December 31, 2022.

However, in the current context, the Economic Committee said it was suggested that besides paying special attention to the risk of imported inflation from outside, it is necessary to study the scenario of continuing to reduce consumption tax. especially to respond in case of large fluctuations in world oil prices and higher increases, as well as to postpone and delay the increase of taxes and fees in order to stabilize the prices of other consumer goods.

In addition, there are suggestions to report more clearly on the recent shortage of gasoline; that the management of gasoline prices still has many shortcomings.

The Chairman of the National Assembly’s Economic Committee also noted, with the central banks of major countries, especially the United States, moving to tighten monetary policy due to concerns that inflation could lead to room for policy changes. fiscal and monetary to support economic recovery will be narrower; An increase in USD interest rates may increase foreign debt repayment obligations (when the proportion of foreign debt in USD still accounts for a large proportion of foreign debt).