Vietnam may shift cost burden of plastic bags on consumers

Single one nylon package is sold at a dirt-cheap price

The environmental tax on plastic bagsis VND50,000 ($2.17) per kilogramme. With the manufacturing price of VND20,000 ($0.87) per kilogramme, the retail price of one kilogramme of plastic bags should be at least VND70,000 ($3). However, it usually goes for VND18,000-40,000 ($0.78-1.74).

A plastic bag store in Ho Chi Minh City’s Binh Thanh district, sells about 1,300 plastic bags to the kilogramme for VND40,000 ($1.74), which suggests plastic bag vendors have a flourishing side business of selling bags off the books.

More waste, less tax

Despite the government project on enhancing control over environmental pollution from plastic bags that has been rolled out nearly a year ago, the State Audit Office of Vietnam inadequacies in collecting and recycling are still common. This was shared by Nguyen Le Son, the State Audit's deputy chief auditor in Ho Chi Minh City and the provinces of Long An, Binh Duong, and Tay Ninh.

According to the latest data published by the Ho Chi Minh City Department of Natural Resources and Environment, the city in 2017 produced about 80,000 tonnes of plastic waste, but only 38 per cent of this was recycled. Sadly, there has been no reduction in the amount of plastic bags reaching the environment, that has gone from 40 tonnes a day in 2008 to 228 tonnes in 2017. At the same time, the volume of imported plastic bags also grew by 250 per cent in four years, from 63.8 tonnes in 2014 to 220 tonnes in 2017.

However, contrary to the rising amount of plastic garbage, the state's environmental tax revenue from plastic bags has been falling. Specifically, the amount of taxed plastic bags fell from 746 tonnes a day in 2014 to 577 tonnes in 2017, equalling a decrease of 23 per cent.

Explaining this reduction, Vinh Nga from the SAV, who directly audits this tax line, pointed out the inconsistency high-quality plastic bags are sold at VND50,000-60,000 ($2.17-2.6) per kilogramme (including taxes), while low-quality plastic bags (made from scrap plastics) is only a little more than VND10,000 ($0.43).

“We are applying VND26,000 ($1.13) per kilogramme as a general manufacturing price for all taxed plastic bags, and the tax for the goods was VND40,000 ($1.74) per kilogramme in 2018,” said Nga. However, the manufacturing price is inappropriate because it is cheaper to manufacture at higher volumes. “The manufacturing price is about 65 per cent of the tax charge. This is untenable and needs to be changed as soon as possible.”

Shifting the burden on consumers?

As it is useless to slap environmental tax on plastic bag manufacturers, policymakers have proposed apply the tax on consumers.

Environmentalist Nguyen Hoang Nam from the Institute of Strategy and Policy on Natural Resources and Environment cited the Ministry of Natural Resources and Environment’s survey on the environmental tax policies of many countries, which shows that 30 out of 50 countries apply the tax on consumers.

“Consumers will have to be charged for every nylon package they buy at supermarkets or stores,” said Nam. “This will change consumption behaviours as well as reduce the amount of used plastic bags.”

Nam also said that in addition to shifting the tax on consumers, it is necessary to offer incentives to boost manufacturing bags from eco-friendly materials.