The Ministry of Finance (MoF) has compiled a draft Resolution for the National Assembly Standing Committee on environmental protection taxes for gasoline and oil.

It proposed an additional reduction of VND500-1,000 ($0.02-0.04) per liter on the environmental protection tax on gasoline and oil to stabilize domestic gasoline prices. It will keep the excise tax and VAT on gasoline unchanged.

Under the Law on Environmental Protection Tax, adjustments for gasoline are the domain of the National Assembly Standing Committee and there is still room to adjust rates on gasoline and oil.

According to the MoF, gasoline is an essential commodity in people’s lives and an input for many production industries, so fluctuations in prices affect many in the economy. Therefore, reducing the environmental protection tax rate on gasoline, regardless of the application, will support the economy and the people.

Regarding the effect, if the Resolution was to be issued in July, it would take effect from August 1 to December 31. Then, from January 1, 2023, the environmental protection tax rate for gasoline and oil will again comply with Resolution No. 579/2018/UBTVQH14.

It is expected that if the Resolution is passed, the reduction to environmental protection taxes on gasoline and oil will contribute to easing production costs and lowering product prices, helping businesses increase their resilience.

Since the resolution reduces the price of gasoline and oil, it also results in a reduction in VAT collections. If it was issued in July and takes effect on August 1, it is estimated to cut State budget revenue (including VAT) by about VND1.4 trillion ($60.65 million) a month.

Previously, Resolution No. 18/2022/UBTVQH15 dated March 23, 2022, on reducing the environmental protection tax rate for gasoline (except for ethanol), diesel oil, lubricants, and kerosene from April 1, 2022 to the end of December 31, 2022 resulted in a reduction of about VND2.661 trillion ($115. 3 million) a month.

If the draft Resolution is passed, State budget revenue will be reduced by about VND20.305 trillion ($879.85 million) for the year as a whole after the two reductions, according to MoF calculations.