Reasons outlined for maintaining petrol and aircon tax

Reasons outlined for maintaining petrol and aircon tax, photo Le Toan

At last week’s meeting of the National Assembly Standing Committee (NASC), Hoang Thanh Tung, Chairman of the NA’s Committee on Legal and Judicial Affairs, expressed concern that petroleum and air conditioners are still suffering from special consumption tax (SCT).

“Gasoline is an essential commodity, not only an input for the economy but also in people’s lives. Moreover, it has already subjected to environmental protection tax,” he said. “Therefore, we should reconsider whether to include it in the list of commodity subject to SCT or not.”

Similarly, with air conditioners now set up in every house across the country, a more specific and convincing explanation is required for the status quo to remain, he added.

“We should carefully consider and calculate the impact of SCT to make the best decision, both controlling consumption of luxury goods, and mitigating the impact on production and business activities that could affect the country’s economic growth goal,” Tung said.

Phan Van Mai, Chairman of the NA’s Economic and Financial Committee, said that environmental protection tax will also contribute to limiting the use of petrol and air conditioners. “If considering an essential input of the economy, SCT is not essential to impose, but we can maintain imposing environmental tax,” Mai said.

The amended draft law on SCT that the Ministry of Finance has submitted to the NASC still names petrol and air conditioners (less than 90,000BTU) to be imposed SCT at 7-10 per cent.

Cao Anh Tuan, Deputy Minister of Finance, said that in recent years, the demand for air conditioning in Vietnam has been increasing, although some equipment has seen their technology upgraded to mitigate the use of refrigerants that are harmful to the environment and apply energy-saving technology.

“However, air conditioners are still using different refrigerants, some of which are harmful to the environment, causing global warming. And although inverter technology may save 20-40 per cent of electricity consumption compared to other products, it still causes harm to the environment,” Tuan said.

In 2024, the prime minister established a national plan for the regulation and eradication of ozone-depleting substances and controlled greenhouse gases. Other countries such as South Korea, India, and Norway are imposing SCT on hydrofluorocarbons, synthetic gases used as refrigerants and coolants in air conditioners, and which contribute to climate change.

In Europe, to save energy, many countries have issued regulations on the use of air conditioners. For example, Spain prohibits setting air conditioners less than 27 degrees. In the United Kingdom, homeowners who want to install air conditioners must apply for a licence and receive regular checks for efficiency and performance.

“Therefore, it is necessary to continue to impose SCT on air conditioners with a capacity of less than 90,000BTU to raise awareness of limiting consumption, as well as orienting consumption to save electricity and protect the environment,” Tuan said.

For petroleum, Tuan explained that E5 and E10 biofuels are mixed in proportions corresponding to 95 and 90 per cent, while RON92 petrol includes 5-10 per cent of bioethanol. Petrol consists of plenty of fossil fuels and is not renewable, and so is required to be used economically.

Many countries apply SCT on petrol and at low rates for biofuel, such as the UK, some EU members, South Korea, Australia, Thailand, Singapore, China, and more.

The original law on SCT from 2008 has been updated four times, following the introduction of a tax system reform strategy for 2011-2020 and alongside changes in international commitments, high-income consumption regulations, and environmental protection awareness.

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Business weighs up petrol tax cut bid While the Vietnamese government has yet to decide on the reduction of the environmental protection tax on petrol, concerns have been raised regarding petrol imports, as local refineries already face losses due to impending machinery shutdowns, such as at Dung Quat Refinery.