The Ministry of Finance has put forward several environmental tax proposals on fuel and lubricant in 2023.

In the first scenario, in which global oil prices dip under US$70 per barrel, environmental tax is set at a ceiling of VND4,000 per litre of gasoline, VND3,000 per litre of jet fuel and VND2,000 per litre of diesel. In this scenario, state budget collection is said to be unaffected.

In the second scenario, in which global oil prices stay between $70-80 per barrel, environmental tax is set to decrease by 25 per cent from the ceiling limit or VND3,000 per litre of gasoline, VND2,250 per litre of jet fuel and VND1,500 per litre of diesel. Consequently, state budget collection is said to decrease by VND1.4 trillion per month.

In the third, in which global oil prices stay between $80-100 per barrel, environmental tax is to be cut by half or VND2,000 per litre of gasoline, VND1,500 per litre of jet fuel and VND1,000 per litre of diesel. State budget collection is said to decrease by VND2.8 trillion per month.

Lastly, in which global oil prices reach over $100 per barrel, environmental tax is to be set at a floor limit of VND1,000 per litre of gasoline, VND1,000 per litre of jet fuel and VND500 per litre of diesel. In this scenario, state budget collection is said to decrease by VND4.2 trillion per month.

In each scenario, the rights and interests of all stakeholders including the government, fuel traders, retailers, industries and businesses are taken into account, according to the ministry.

The ministry stressed the importance of staying prepared and proactive in dealing with the global oil prices, which are predicted to stay volatile at least in the foreseeable future, and the effect on domestic industries and commercial activities.

Starting next year, the National Assembly (NA) Standing Committee's decrees on lowering environmental tax on fuel and lubricant to its floor limit for 2022 are set to expire, bringing it back to its ceiling limit from January 1, 2023.

The ministry's proposal is part of an attempt to avoid that, which may potentially cause disruption and damage to the economy, as well as the government's efforts to stabilise the macroeconomy and curb inflation.

The ministry proposed the tax take effect immediately once approved by the Prime Minister's Office without consultation with the NA Standing Committee, as previously required, to better keep up with the market and control fuel prices. — VNS