Although the environmental protection tax has been reduced by 50%, gasoline prices are still at a record high after the adjustment period on May 11, so it is difficult to achieve the economic growth target as expected.
From 3pm on May 11, the price per liter of E5RON 92 gasoline increased by 1,490 VND to 28,950 VND/liter, RON95 gasoline increased by 1,550 VND to 29,980 VND. This record high price is putting heavy pressure on the business community and people.
According to economic expert, Dr. Nguyen Bich Lam, former director of the General Statistics Office, gasoline costs account for about 3.52% of the total production costs of the whole economy. According to calculations, a 10% increase in gasoline prices will reduce GDP by about 0.5% – a rather large reduction, reflecting the very strong impact of gasoline price fluctuations on economic growth.
In addition, the domestic economy is highly dependent on imported raw materials from outside, with the proportion of cost of imported materials in the total cost of raw materials of the whole economy at 37%. When the world gasoline price increases, it will increase the price of imported and domestic raw materials.
In the context that the economy is in need of recovery after a period of stagnation because of the COVID-19 epidemic, if the price of gasoline increases, it will lead to an increase in the price index of all other industries, especially the transportation sector. logictisc…
Especially when gasoline prices continue to rise, it will reduce the effectiveness of the fiscal policies being implemented to stimulate consumption demand, stimulate growth, and reduce inflation pressure, leading to failure to achieve the target of economic growth. growth, budget revenue loss but inflation still increased.
Economist, Assoc. Prof. Dr. Ngo Tri Long shared the same opinion when saying that petroleum is an essential commodity and an input for most production industries. Therefore, when gasoline price increases, it not only directly affects consumers but also negatively affects production and business activities.
In the context that the economy is facing many difficulties because of the COVID-19 epidemic, purchasing power is still weak, this price increase will slow down the economic recovery process. The urgent issue now is to quickly restrain the increase in gasoline prices to prevent negative market fluctuations.
“The economy is entering the early stage of recovery, production and business activities have begun to resume. But too high gasoline prices will push input costs of goods, create a burden on business costs, hit people’s pockets, and slow down the recovery of the whole economy, “ said Mr. Long.
Should reduce more taxes
According to expert Ngo Tri Long, the domestic gasoline price currently depends greatly on the world petrol price and the adjustment of two “valves” is tax and the Price Stabilization Fund (BOG). In the context that the world gasoline price is continuously increasing, the BOG fund is exhausted, the cooling of gasoline prices only depends on the tax “valve”.
Currently, each liter of petrol sold on the market has to bear four types of taxes including value added tax of 10%, import tax of 10%, special consumption tax of 10% and environmental protection tax. But of these, the environmental protection tax has been reduced by 50% from 1/4. Import tax is already low, only excise tax can be reduced. However, Mr. Long acknowledged that tax reduction for petroleum products is currently difficult, because the revenue source is being severely affected. Tax collection on fuel products plays a huge role in budget revenue.
“The problem of reducing gasoline prices in the short term is too difficult, but in the long run, it is necessary to adjust and reduce the special consumption tax for petroleum products. The State will have to study very carefully and come up with appropriate solutions, both to curb the increase in gasoline prices and to ensure a source of revenue for the state budget,” Long emphasized.
Assoc. Prof. Dinh Trong Thinh also said that special consumption tax should be balanced. Because this tax should only be levied on harmful goods and services, luxury goods while gasoline is an essential commodity. Moreover, petroleum is also subject to environmental protection tax.
According to Mr. Thinh, the reduction and exemption of taxes calculated on a percentage of the cost will ensure flexibility and the ability to affect macro factors of the economy. In case the revenue from taxes and fixed fees on petrol and oil prices is reduced due to new regulatory policies, it will be partially balanced by revenue from exported crude oil.
However, Mr. Thinh also noted that the gasoline price reduction needs to be carefully calculated because Vietnam’s gasoline and oil tax is lower than that of other countries in the region. If the price of gasoline is too low, it will lead to the development of smuggling. In fact, right in the last April – May, when the domestic gasoline price adjusted down, there were a number of cases of petrol smuggling detected on the southwest border.
From a business perspective, Mr. Do Van Bang, Vice Chairman of the Hanoi Transport Association, said that gasoline accounts for about 40-50% of transportation costs, so the increase in petrol prices puts great pressure on transport enterprises. load. In order to better support businesses in the current context, it is advisable to temporarily suspend the collection of environmental protection tax, when the business is healthy, then continue.
“The transportation industry faces many challenges. Only by adjusting taxes and petrol fees can it lower the price of gasoline, making it less difficult for businesses, “ said Mr. Bang and said he could.
According to Dr. Nguyen Bich Lam, in our country petroleum is one of the strategic commodities controlled by the state. The selling price is managed on the basis of ensuring the interests between the State, enterprises and people.
According to regulations, the Ministry of Industry and Trade captures gasoline prices on the world market, and coordinates with the Ministry of Finance to analyze price and tax factors to adjust taxes related to gasoline. Simultaneously, the two ministries and businesses identified, evaluated and coordinated smoothly to use the petroleum BOG fund.
“The Ministry of Industry and Trade, the Ministry of Finance, and businesses need to closely follow developments in the petroleum market, the world political situation affecting petroleum supply to have flexible solutions to cope with high oil prices in order to minimize negative impact on growth and inflation in 2022″, Mr. Lam said.