The environmental protection law will be valid as of January 1, 2012, or after five months. The environment tax, in the immediate time, will be imposed on eight categories of products which are considered to have big impacts on the environment.
According to Nguyen Thi Cuc, former Deputy General Director of the Vietnam Department of Taxation, now Chair of the Vietnam Tax Consultancy Association VTCA, a member of the environmental tax compilation committee, the “products for limited use” could be understood as the most toxic and easy to control. Meanwhile, in fact, many other products potentially harmful to the environment still have not been put into the taxation list.
However, the environmental protection law allows the National Assembly’s Standing Committee to add taxation items after considering the real situation. This means that the number of items to be imposed the environment tax will increase.
Now or too late
It is understandable that the environment tax has not been applauded by people. Even in developed countries, this kind of tax also does not get support from the public.
According to the Ministry of Finance, in 2010, Vietnam collected 10,500 billion dong in fuel fee through petroleum product sale, while the figure is expected to reach 12 trillion dong in 2012. The maximum fuel fee is 1000 dong per liter of petroleum products sold. Meanwhile, in the environment tax, the collection level would be 4000 dong, which means that the petroleum prices will increase.
A lot of experts have warned that the petroleum price increases would burden people and make the inflation more serious. They say that no developing country, including China, imposes environment tax on petroleum products. Japan, a developed economy, has also decided to halt the collection of environment tax in the fiscal year commencing from April 2010.
However, Cuc and environment tax compilers do not think this way. She said that the environment taxation aims to raise the awareness of restricting the use of substances and goods that badly influence the environment. Besides, the taxation will force people to think carefully before purchasing goods and encourage them to use alternative non-toxic products.
For example, since the petroleum prices increase, people would think of using public means of transport instead of private vehicles.
“In some other countries, people have to buy oxygen to breath in the polluted environment. Vietnam may face the same problem if it does not soon apply the environment tax law,” Cuc has warned.
Transparency is the key
Chas Roychowdhury, Tax Director of the Association of Chartered Certified Accountants (ACCA), also said that in the context of economic difficulties, it is really difficult to persuade people to pay money on a new type of tax. Therefore, it is necessary to make people understand that the taxation is not the way the government uses to collect more taxes, and to show people what the government will do with the money to be collected.
He emphasized that the confidence of the public always plays a very important role in the successful implementation of tax policies. The government and policy makers need to harmonize the purpose of increasing the tax collection and the purpose of protecting the environment in designing the tax policies.
He has also warned that this may happen that the manufacturers would leave the countries which apply strict environment tax policies for the countries which impose lower taxes. Therefore, he said, the international cooperation is very necessary in the implementation of the environment tax law.
It is expected that Vietnam will collects 57 trillion dong a year in environment tax, which means that every person at the working age has to pay a million dong a year.
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