Environmental tax adjustment could increase electricity prices

According to the report on environmental protection tax, the Government proposed to increase the tax rate for each ton of anthracite coal from the floor level of VND20,000 to VND30,000, and from VND10,000 to VND15,000 for fat coal, brown coal and other types of coal. The adjustment is said to be aimed at limiting coal mining and using alternative resources that have less impact on the environment.

The Ministry of Finance estimates that each year the budget will collect 2,385 billion VND in environmental tax on coal, an increase of nearly 800 billion VND compared to before the adjustment.

However, Deputy General Director of Vietnam National Coal and Mineral Industries Group (TKV), Mr. Nguyen Hoang Trung, said that the view of increasing taxes to limit the impact of coal mining is not only inappropriate but also has a profound impact on the economy.

“The tax increase makes it difficult for mining enterprises to invest in development, improve productivity and product quality. Besides, coal is the main source of raw material for electricity production, so the adjustment also directly affects the cost of electricity production,” said Mr. Trung.

Increasing environmental taxes on coal could affect electricity prices.

According to TKV leaders, current taxes and fees account for about 14-15% of the total cost. Investment efficiency has decreased due to the continuous increase in taxes and fees, for example, the resource tax in the 2014-2016 period doubled to 10% for underground coal and 12% for open-pit coal. On average, each year, this enterprise pays over 5,000 billion VND in resource tax (equivalent to 140,000 VND for each ton of coal) and hundreds of billions of VND for environmental protection fees, use of mineral exploration documents, granting of mineral exploitation rights, etc.

Based on the domestic coal consumption output of 35 million tons per year, the adjustment of environmental tax will cause TKV to pay an additional 350 billion VND in tax and reduce profits by about 170 billion VND.

"The Ministry of Finance is requested to review and report to the Government and the National Assembly Standing Committee not to adjust the increase in environmental protection tax on coal," said the leader of TKV.

Contrary to the viewpoint of leading coal mining enterprises, some agencies such as the Tax Department of Bac Giang and Hau Giang provinces... proposed to increase the environmental tax bracket for this item. Accordingly, anthracite coal increased from 20,000 VND to 50,000 VND; fat coal and coal increased from 10,000 VND to 40,000 VND.

In addition to the majority of opinions in agreement, the Hanoi People's Committee is one of the few agencies that believes that the Government needs to add a suitable implementation roadmap because coal is an essential common product and input material for many industries, so increasing environmental tax could negatively affect the consumer price index (CPI) and the competitiveness of domestic products, including electricity.

It is expected that the National Assembly Standing Committee will give opinions and decide whether to approve or not after listening to assessments from the review agency.