Finance Ministry refuses petrol price increase by environmental tax hike

The Ministry of Finance yesterday reaffirmed that the recently increase of 300 percent on environmental tax rate did not push petrol price up as it was made in combination with import tariff cut.

Environmental tax rates raised from VND1,000 to VND3,000 a liter of gasoline and VND500 to VND1,500 per liter of diesel on May 1.

According to the ministry, it has cut import tariff rates to prevent the environmental tax hike from increasing petrol prices.

Specifically, gasoline import tariff slid from 35 percent to 20 percent on May 5.

Diesel rate fell from 20 percent to 12 percent on the same day after reducing from 30 percent to 20 percent in April. It continued dropping to 10 percent on May 20.

On May 31, basic gasoline price plus the old tariff rate of 35 percent and new environmental tax rate was VND23,582 per liter. It is only VND21,540 a liter with  the new tariff rate.

The import tariff reduction has cut basic gasoline price by VND2,042 a liter, VND42 higher than the increase level of environmental tax.

Similar calculation for diesel leaves a difference of VND1,356 a liter between the new and old import tariff.

From these calculations and analyses, the Ministry of Finance reaffirmed that the environmental tax hike did not affect petrol price.

After environmental tax rate increased by VND2,000 on May 1, petrol price has accelerated by VND1,950 on May 5 and VND1,200 on May 20 totaling VND3,150.

Retailed petrol price is VND20,430 a liter now.

By Ngoc Quang – Translated by Hai Mien

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