Amending tax policies to modify consumption
Vu Van Truong, Head of the Tax Policies Department under the Ministry of Finance, talks about the changes in the special consumption tax (SCT) bill.
The SCT law has just been amended for the second time recently. Why does it need to be amended once more?
The SCT law was brought into life in 1998, and then it was amended in 2003 and 2005. However, the latest amendment still cannot cover all the subjects of taxation, for example, motorbikes with cylinder capacities of 175 cc and higher, aircrafts and yachts not used for commercial purposes. Meanwhile, vehicles serving public services, ambulances, vehicles to carry prisoners, and imports to non-tariff areas must be taken off the list of SCT subjects.
In general, the SCT law needs to be amended to meet the demands of socio-economic development, to help modify consumption and accommodate the incomes of consumers.
Could you please tell us about possible changes with the SCT law?
There will be changes with the taxation. For example, vehicles with less than 24 seats designed to carry both cargo and people, motorbikes with cylinder capacities of 175 cc and higher will be added to the list of SCT subjects.
Under current regulations, vehicles with less than 24 seats are assessed SCT and are classified into three groups: vehicles with five seats and less, 6-15 seat vehicles and 16-less than 24 seat cars.
There will be some changes with classification of the three groups of vehicles: less than 10 seat cars, 10-16 seat cars and 16-less than 24 seat cars. As for the taxes on less than 10 seat cars, tax rates will vary depending on cylinder capacities in order to encourage the economy of fuel.
Regarding the tax rates, there will be adjustments in the amended SCT law with the possible tax rates of between 15% and 70%.
You have said that the amendment of the SCT law aims to modify consumption. Why?
Currently, Vietnam does not encourage people to use luxury products, such as 4-seat cars, motorbikes with high cylinder capacities as they consume a lot of fuel. Those who still want to use these luxury items have to pay more, and the money they pay is used for public interests.
However, we need to strive to have higher living standards for people?
Yes, we do, and this is the purpose of all governments in the world. However, consumption must go in accordance with the average incomes of people. As the average income of Vietnamese people is still at a low level, it would be unreasonable to encourage the consumption of luxury items.
The biggest change of the new SCT law is to tax in accordance with use purposes. Do you think that the taxation method will cause difficulties in management and make it unfeasible to implement?
In principle, it is extremely difficult to manage taxation based on use purposes. However, we believe that the management will still be feasible, as the nature of the luxury tax is that it is a tax on personal consumption.
As for bia hoi (draught beer consumed at sidewalk establishments), some people believe that we should remove bia hoi from the list of SCT subjects, as bia hoi is a popular product for common people. What do you think about this?
Though bia hoi is a popular product it is not encouraged. Therefore, bia hoi will still be assessed SCT, and the luxury tax rate will be raised from 30% to 40%, which aims to limit the consumption of this product in particular and alcoholic drinks in general.
Recently, the Brewery and Drinks Association has proposed giving another name to bia hoi and considering this a kind of normal drink, not beer, so it would not be assessed SCT. However, I think that we need to consider this thoroughly before making a decision.
VNN
|
