|
MOF plans tax increases to re-orient consumption tendency
The Ministry of Finance (MOF) has announced a plan to use the import tax and luxury tax as tools to control the national economy. Minimising the trade deficit and limiting luxury goods consumption are the two things the ministry is aiming at.
Spends more than earns
Economists say that Vietnamese people have been spending more than they earn. The viewpoint proves to coincide with the government’s conclusion that while economic growth has slowed, consumption has been increasing.
Statistics show that the loans given to individual clients to fund house and car purchases have been increasing sharply since 2007.
As for car consumption, despite the continuous tax increases, 35,000 cars were imported into Vietnam in the first five months of the year with the import turnover of over $625mil, a six-fold increase over the same period of 2007.
As for other luxury items, Vietnam imported over 43 tonnes of gold worth $1.2bil in the first four months of the year, and it spent $27mil to import cosmetics products in Q1. Meanwhile, the Ministry of Finance said that it can see a ‘deviation’ in the consumption tendency of Vietnamese people.
According to the Ministry of Industry and Trade, people’s tendency to ‘consume more than they can pay’ has been influencing import turnover.
Re-orienting consumption tendency
MOF says that while the import tax and luxury tax are collected from import companies, consumers are the real tax payers. Therefore, raising these taxes will help limit imports, control the national economy and re-orient the consumption tendency of Vietnamese people.
However, MOF said that tax increase will only be applied for luxury products, the consumption of which is not encouraged.
With the latest car import tax increase, the number of imported cars decreased considerably in May 2008.
According to the General Statistics Office, 6,000 cars arrived in Vietnam in May worth $96mil. This was the first time in 2008 Vietnam saw a decrease in car imports.
MOF has wrapped up a plan on changing the subjects of luxury tax and the luxury tax rates.
Ready-processed products from tobacco, vehicles with less than 24 seats, used for carrying both people and cargo, and motorbikes with cylinder capacities of 175 cc and higher have been added to the list of items subject to the luxury tax.
Minister of Finance Vu Van Ninh said that with the proposed tax rates, Vietnam is still adhering to its WTO commitments. He said that this is a step suitable to the current conditions of the national economy which can help re-orient the consumption tendency of Vietnamese people.
The proposed luxury tax rates expected to be applied as of 2010: liquor with 20 percent alcohol and higher will be imposed 60%; beer will be assessed a tax of 55%.
Cigarettes, cigars and products processed from tobacco will bear a 65% tax rate; 175 cc and higher motorbikes 20%.
Cars with less than 10 seat and less than 2,000 cc will be assessed a 50% tax, while 2-3,000 cc and higher cars will bear the tax rate of 60%, and ones with capacities of more than 3,000 cc will bear the rate of 70%.
VNN
|
