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Paper import tax up, printing press suffer
The Ministry of Finance on February 10 released the decision on raising paper import tax sharply in order to prevent massive paper imports which have caused large stocks of paper of up to 150,000 tonnes. However, the decision is believed to cause difficulties for printing newspapers and the publication.
Tax up by 9%
The Circular No. 28 released on February 10 by the Ministry of Finance, which will be valid for the customs declarations on February 16, 2009, stipulated that the import tax on newsprint has been raised from 20% to 29% (category 4801). Meanwhile, the tax rate on uncoated paper and carton (category 4802) has been raised from 25% to 29%.
The decision on paper tax increase has been made after the Vietnam Paper Association proposed the increase, saying that the tax increase is necessary to prevent massive paper imports.
The association said that since the end of August 2008, as the result of the import tax reduction policy, import paper products have been flocking into Vietnam, making local paper production suffer with the paper stocks reaching 150,000 tonnes. The massive paper imports have pushed enterprises against the wall with many of them having to shut down production temporarily.
The association said that the import tax increase will help rescue the local production and the local paper industry.
The association pointed out that printing and publication will not suffer much from the tax increase. Though the prices of paper and other input materials have decreased sharply since the end of 2008 in comparison with July and August 2008, the prices of paper and other publications have not decreased. Prior to that, publishing houses, reasoning the paper price increase, raised the sale prices by 20-50%.
Publication will suffer
Nevertheless, the decision on tax increase has not been applauded by publishing houses, which said that the move is not reasonable. They have pointed out that thought the world’s paper prices have been decreasing, the domestic prices have not decreased yet mainly because of the high production cost and out-of-date technologies.
Experts have also reminded people that the Vietnam Paper Association itself once asked for the tax decrease from 32% to 20% (the proposal was approved and the tax decrease decision was enacted on September 1, 2008). At that time, the association said that the tax decrease was necessary to encourage investors to inject money in projects on producing printing papers and newsprint with high technologies.
Nguyen Quynh Thang, Director of Nhan Dan Newspaper Printing House in Hanoi said that papers make up 65% of the production cost of the newspaper; therefore, the higher import tax will pressurise printing newspapers. Thang said that in 2008, when the paper price increased, the volume of newspapers printed at the Nhan Dan Printing House decreased by 9%.
Nguyen Van Tam, Deputy Chairman of the Vietnam Printing Association, said that the tax increase will cause big difficulties for printing houses which consume several hundreds thousands tonnes of paper every year. Tam recalled that in 2008 that the paper price increase forced a lot of printing houses, who won the bid to print student textbooks, give up the games.
Tam also said that the higher sale prices of newspapers and publications will keep people away from accessing culture products.
VietNamNet, VnMedia
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