Minister Tran Tuan Anh confused when "0% tax, car prices still increase"

On October 30, the National Assembly began its question-and-answer session, which is expected to last for three days. During the morning session, the issue of import tax on cars from ASEAN countries being reduced to 0%, but the price of cars has not decreased significantly, and the selling price of some car models is even more expensive, was raised by the National Assembly deputies.

National Assembly Delegate Cao Dinh Thuong (Phu Tho).

National Assembly Deputy Cao Dinh Thuong (Phu Tho) provided information and statistics from the General Department of Customs from the beginning of the year to date showing that 32,000 cars have been imported to Vietnam, of which over 90% of the cars are imported from ASEAN countries. Notably, although import tax has been reduced from 30% to 0%, the price of imported cars from ASEAN countries has not actually decreased, in fact, some car models are more expensive than before.

"If this situation continues, the government will lose tax revenue, consumers will suffer economic losses, and only import businesses will benefit greatly. How does the Ministry of Industry and Trade explain the above unusual situation? Who is responsible?", Mr. Thuong asked.

Minister of Industry and Trade Tran Tuan Anh.

However, answering the question of National Assembly Deputy Cao Dinh Thuong, Minister of Industry and Trade Tran Tuan Anh did not go straight to the point.

According to Minister Tran Tuan Anh, Vietnam is deeply integrating with the world. In the integration process, free trade agreements (FTAs) with conditions of tax cuts and simplification of administrative procedures help businesses and people benefit. This is the driving force for economic growth.

Mr. Tran Tuan Anh said that from January 1, 2018, the import tax on cars under the AFTA Agreement signed with ASEAN will be reduced from 30% to 0%. Along with that, the tariff barrier on cars will also be reduced with a series of other FTAs.

"This is the commitment of member countries to access the market. We have carefully calculated in the negotiations to ensure national interests, serve the growing needs of the domestic market, consumers, and the interests of manufacturing enterprises," Mr. Tran Tuan Anh affirmed.

In addition, the Minister of Industry and Trade also said that besides tax reduction, there are other points that create revenue for the State budget, this is the point that creates balance when participating in FTAs. At the same time, when opening up, Vietnam also has conditions to increase the export of advantageous products.

Preferential and self-defense policies for domestic production and the automobile industry aim to create conditions for Vietnam to become a developing market, developing domestic and imported automobiles, serving the needs and ensuring the interests of consumers.

Illustration photo.

Regarding the situation of Vietnam's automobile market, Minister Tran Tuan Anh said that according to statistics from the beginning of 2018, there has been no significant change in automobile imports from ASEAN. Basically, the domestic market size of Vietnam is about 500,000 vehicles, with annual imports of about 200,000 vehicles, and the rest are produced domestically.

“We do not see any major problems with our domestic automobile market,” Minister Tran Tuan Anh affirmed.

However, not satisfied with Minister Tran Tuan Anh's answer, National Assembly member Cao Dinh Thuong once again pressed the debate button.

"Voters are concerned that over the past year, import tax from ASEAN has decreased from 30% to 0%. Voters simply think that car prices will decrease by about 30%, but car buyers even buy more expensive cars. The question is, does the State lose tax revenue? And do people suffer? Do import businesses benefit from taxes?"

This time, National Assembly Chairwoman Nguyen Thi Kim Ngan asked the Minister of Industry and Trade and the Minister of Finance to respond to delegate Thuong in writing.