Deputy Prime Minister: Calculating reduction of special consumption tax and VAT on gasoline

This request was made by Deputy Prime Minister Le Minh Khai, Head of the Price Management Steering Committee, at a meeting on the afternoon of July 8.

Oil prices showed signs of cooling down last week, but Deputy Prime Minister Le Minh Khai warned against complacency as the Russia-Ukraine conflict has not ended. Gas demand in Europe will increase as winter approaches, which will be a factor in causing oil prices to rise again, while supply depends on many factors.

He emphasized,gasolineis a strategic commodity, affecting the consumer price index. The price of gasoline in the operating period on July 1 has decreased slightly but is still at a very high level, such as RON 95-III gasoline at 32,760 VND per liter. Therefore, the Deputy Prime Minister asked the Ministry of Finance to evaluate and immediately have the next tax solution for gasoline while there is still room.

"Recently, we have calculated to reduce environmental protection tax, but if there is still room, we can propose to the National Assembly Standing Committee to submit to the National Assembly to further reduce VAT,special consumption tax"We must quickly handle this fiscal policy to control prices because gasoline has a big impact on the CPI," said the Deputy Prime Minister.

Deputy Prime Minister Le Minh Khai directed at the meeting of the Price Management Steering Committee on the afternoon of July 8.Photo: VGP

From July 11, the environmental tax on gasoline will be reduced by VND1,000 per liter for gasoline and VND500-700 per liter for oil products, according to the decision of the National Assembly Standing Committee. That is, the retail price of gasoline will be reduced by VND550-1,100 per liter (including VAT). It is expected that the management of gasoline prices will take place at 0:00 on July 11, coinciding with the time when the Resolution on reducing environmental tax on gasoline takes effect.

With the current world oil price developments, a representative of the Ministry of Industry and Trade said there is room for a strong price reduction, reflecting the tax reduction and re-appropriation of the Oil Stabilization Fund.

According to the report of the Ministry of Finance, the standing agency of the Steering Committee, gasoline prices have gone through 17 price adjustments. Compared to the beginning of the year, gasoline prices of all kinds increased by 3,360 - 11,376 VND per liter or kilogram, equivalent to an increase of 20.54-65.44% depending on the product.

The price stabilization fund has been continuously spent to stabilize domestic fuel prices and by the end of June, the fund had only a surplus of over 223.5 billion VND.

Regarding the supply of petroleum, the ministry has assigned the minimum import quota and increased total import quota to 10 key enterprises. At the same time, the joint ministry also has a backup plan for other key enterprises to ensure that the supply always meets domestic consumption and production needs.

For localities, government leaders need to have solutions to stabilize, control and check price forming factors. In case of abnormalities, inspection must be carried out immediately. Localities are also required to strengthenanti-smuggling of petrol across the border, when gasoline prices in Vietnam are lower than in some countries sharing borders, such as Laos, Cambodia or China.

Also according to the report of the Ministry of Finance, on average in the first 6 months of 2022, CPI increased by 2.44% over the same period last year. Core inflation in the first 6 months of the year increased by 1.25%.

Gasoline prices increased by nearly 52% compared to the same period in 2021, causing the overall CPI to increase by 1.87 percentage points. Domestic gas prices increased by nearly 26% compared to the same period, causing the CPI to increase by 0.38%....

Faced with unpredictable developments in commodity and service prices, the Deputy Prime Minister directed management agencies and localities to be transparent in information and price management, especially the price developments of important materials and essential goods... to avoid hoarding of goods and inflationary expectations among the people.