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Amendment of Environmental Protection Law: Proposing to expand the objects and adjusting the taxes

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Updated on : 25-07-2017

VCN- This was the opinion of many experts at the workshop "Completion of policy on environmental protection tax and fee" held by the Financial Policy and Strategy Institute in coordination with the Tax Policy Department (under the Ministry of Finance) and the University of Finance – Marketing last weekend in Ho Chi Minh City.

Expanding the objects

Accordingly, most of the experts suggested that we should expand the taxable objects. Dr. Vuong Thi Thu Hien, the Academy of Finance, said that environmental protection tax focused on goods and services which had a bad impact on the environment. In fact, there are many unspecified goods subject to environmental protection when putting into use, having a large scale of pollution, badly affecting the ecological environment and human health, including chemical fertilizers, detergents, growth stimulants, coal gas and natural gas. Many countries in the world have also levied a tax on these products.

According to Ms. Tran Thi Mo, the Department of Taxation, under the University of Finance - Marketing, the environmental protection tax of Vietnam currently focuses on consumers, while many polluters are manufacturing enterprises which do not have to pay much attention. Accordingly, it is necessary to transfer these objects to collect taxes on emissions, pollution of water sources in addition to strengthening inspection and supervision of enterprises.

According to Assoc. Prof. Dr. Le Xuan Truong, the Academy of Finance, there was a need to expand the taxable objects on batteries, due to these items in the process of production, or use of waste utilization, polluting the environment. According to Mr. Truong, the excise tax and environmental protection tax rate for some goods are not reasonable and not enough to promote green production and green consumption, not harmonious in growth requirements, green growth in tax policy. In particular, although plastic bags have been put into the category of environmental protection tax with a maximum frame of 50,000 VND per kg, the consumption of plastic bags is not reduced. The current environmental tax rate for petrol is not large enough to promote the economical and efficient use of this fuel.

Regarding the effectiveness of tax policy implementation for plastic bags in Ho Chi Minh City, Ms. Do Hoang Oanh, the Deputy Director of Planning and Finance Department, the Department of Natural Resources and Environment of Ho Chi Minh City said the new policy had been effective. In particular, most of the supermarkets in the area have switched to environmentally friendly plastic bags, so the amount of plastic bags used in supermarkets has dropped by more than 80%. However, the efficiency in traditional markets is very limited.

According to Ms. Nguyen Thi Thanh Huyen, the Institute of Financial Strategy and Policy, besides the tax on plastic bags, there should be mechanisms and policies to support enterprises to collect and recycle plastic waste or produce environmentally friendly alternative plastic bags. This helps to reduce the cost of environmentally friendly products and encourages people to switch from using plastic bags to environmentally friendly bags.

As for gasoline, Mr. Le Thanh Quang, University of Finance and Marketing said that gasoline was often lost in the process of management, storage, transportation, and pumping. This will have an impact on the environment, so it is necessary to collect gasoline taxes right from the time of importation.

Increasing taxes on coal and herbicides

At the workshop, experts raised the experience of many countries on environmental protection tax policies, thereby proposing tax rates to the beneficiaries. However, Ms. Do Hoang Oanh said that when referring to experience in other countries, the drafting committee also needs to compare and compare the income level between Vietnam and those countries. Specifically, many countries have higher gasoline prices than Vietnam, but many of these countries have much higher incomes than Vietnam. According to Ms. Oanh, the tax bracket applied to gasoline should be regulated by the percentage of the basic unit price excluding VAT instead of unit. It will be convenient for the application and realistic pricing fluctuations.

At the workshop, Ms. Do Hoang Oanh also raised the difficulties of the State agencies in the management. In particular, the means of measurement of state agencies are very limited, leading to the controversial tariffs with businesses. Agreeing with Ms. Oanh, Mr. Le Thanh Quang also believed that there was a scientific basis to assess the impact of products on the environment when introducing. In the draft, the difference between the tariffs in some items is quite large, such as plastic bags from 40,000 VND to 200,000 VND per kg.

Currently, environmental protection tax rates on other goods, including coal, herbicides, pesticides, are at a minimum in the tax framework. The draft Law amending and supplementing some articles of the Law on environmental protection tax proposed not to adjust the environmental protection tax framework for these goods. However, many people argue that there should be a long-term vision for each revision of the Law. Accordingly, in the next two-third of coal will have to be imported for thermal power generation, most of which are BOT projects. Thus, the benefits belong to investors and the State must solve environmental problems. Therefore, it is necessary to increase the tax framework for these cases.

By Nguyen Hien/ Hoang Anh