Vietnam plans to cut fuel taxes as inflation soars

Vietnam plans to cut fuel taxes as inflation soars

HANOI (Reuters) – Vietnam’s finance ministry said on Friday it was proposing to the legislature to cut the special consumption tax and value-added tax on fuel to keep inflation below 4 percent this year.

The move follows the central bank’s decision this week to raise interest rates and several previous fuel tax cuts since March, including the environment tax and the most-favoured-nation tariff.

The Ministry of Finance said in a statement that it is proposing two scenarios for the cuts – a 50% reduction in the special consumption tax and 20% in the value-added tax or a 50% reduction in taxes.

According to the ministry, tax collection will be reduced by 7.4-12.2 trillion dong (US$312.24-514.77 million), with the average CPI dropping 0.1%-0.15% if the new tax rates are in place for six months from November.

Vietnam, the regional manufacturing hub, reported 7.72% GDP growth in the second quarter of this year, but like many of its neighbors it faces rising inflationary pressures as food and energy prices soar around the world.

(1 dollar = 23,700 dong)

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