Vietnam plans cuts in fuel taxes as inflation rises

HANOI  – Vietnam’s finance ministry on Friday said it is proposing to the legislature cutting the special consumption tax and value-added tax on fuels to keep inflation under 4 percent this year.

The move will follow this week’s decision by the central bank to raise policy rates and several previous cuts in taxes on fuels since March, including the environment tax and Most Favored Nation tariff.

The finance ministry is proposing two scenarios for the cuts, either a 50-percent cut in special consumption tax and a 20-percent cut in value-added tax or a 50-percent cut in both the taxes, it said in a statement.

According to the ministry, tax collection would be reduced by 7.4-12.2 trillion dong ($312.24-$514.77 million), with the average consumer price index 0.1 percent-0.15 percent lower if the new tax rates are in place for six months from November.

Vietnam, a regional manufacturing hub, reported gross domestic product growth of 7.72 percent in the second quarter this year, but like many of its neighbors, it is facing mounting inflationary pressure as prices of food and energy rise across the world.

($1 = 23,700 dong)