In the Draft Law on Amendments to the Law on Environmental Protection Tax, the Vietnam Ministry of Finance has proposed to increase the environmental protection tax on certain goods such as petrol, oil, and plastic bags to 2-3 times higher than the current tax rates.
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As per the content of the Proposal for making the Law on Amendments to the Law on Environmental Protection Tax in Vietnam submitted to the Prime Minister of Vietnam, the Ministry of Finance has clearly stated the necessity for drafting a new Law Project aimed at amending and supplementing to overcome the shortcomings and issues in the current Law on Environmental Protection Tax in Vietnam. Regarding the content of the environmental protection tax framework, the Vietnam Ministry of Finance analyzed as follows:
- For petrol and oil: The environmental protection tax amount on petrol and oil has reached (for aviation fuel) or is close to the ceiling amount in the tax framework. In the event of needing to adjust the environmental protection tax amount on petrol and oil to align with the state’s socio-economic development policies in different periods, it is very difficult. Therefore, it is necessary to study expanding the environmental protection tax framework for petrol and oil.
- For plastic bags: The Law on Environmental Protection Tax in Vietnam stipulates an absolute tax amount framework for plastic bags from 30,000 VND/kg to 50,000 VND/kg, the current tax amount is 40,000 VND/kg (approximately 200% of the current selling price, but 1 kg of plastic bags can contain 100 - 200 bags, meaning the environmental protection tax only collects about 200 - 400 VND/bag). If the environmental protection tax amount on plastic bags is increased to the ceiling amount of 50,000 VND/kg, it will only be approximately 250 - 500 VND/bag.
According to international experience, many countries around the world are applying high environmental protection tax amounts or banning the production, sale, and use of plastic bags. Specifically: in the UK: 15 cents/bag, equivalent to 4,500 VND/bag; in Ireland: 15 cents/bag, equivalent to 4,500 VND/bag; Hong Kong: 0.05 USD/bag, equivalent to 1,050 VND/bag; Estonia is planning to tax plastic bags at the amount of 2 kroons/bag, equivalent to 3,000 VND/bag. Some other countries even ban the production, sale, and use of thin plastic bags, for example, China prohibits the production, sale, and use of plastic bags with a thickness of less than 0.025mm.
Thus, the environmental protection tax framework and amounts for plastic bags in Vietnam are low compared to other countries in the world, thus having little effect on limiting the production and use of plastic bags. Therefore, it is necessary to study adjusting the environmental protection tax framework for plastic bags to contribute to ensuring the goal of gradually reducing the use of hard-to-decompose plastic bags in consumption and in line with international practices.
In the Draft Law on Amendments to the Law on Environmental Protection Tax in Vietnam, the tax amounts for goods are adjusted as follows:
| No. | Goods | Unit | Tax Framework (VND per unit of goods) |
|---|---|---|---|
| I | petrol, oil, lubricants, including | ||
| 1 | petrol, excluding ethanol | liter | 3,000-8,000 |
| 2 | Aviation fuel | liter | 3,000-6,000 |
| 3 | Diesel oil | liter | 1.500-4.000 |
| 4 | Kerosene | liter | 300-2,000 |
| 5 | Mazut oil | liter | 900-4,000 |
| 6 | Lubricant oil | liter | 900-4,000 |
| 7 | Lubricant grease | kg | 900-4,000 |
| 8 | E5 petrol | liter | 2,700-7,200 |
| 9 | E10 petrol | liter | 2,500-6,800 |
| IV | Plastic bags | kg | 40,000-80,000 |
Currently, the Draft Law on Amendments to the Law on Environmental Protection Tax in Vietnam in Vietnam is in the process of seeking public comments on the Government of Vietnam's web portal, and it is expected to take effect in 2018.
