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Raising milk material import taxes – wrong prescription: MOF
The Ministry of Agriculture and Rural Development (MARD) has been insisting that it is necessary to raise milk material import taxes in order to protect local farmers. However, the Ministry of Finance (MOF) believes that tax increases would be the wrong decision.
Vu Van Truong, Director of the Tax Policy Department under MOF, said:
This is not the first time MOF has received a proposal on raising the taxes on milk materials. MOF keeps close watch over the operations of industries and it will adjust taxes to support enterprises if necessary. The ministry, for example, plans to increase the import tax on paper in order to help ease difficulties on paper producers. However, tax increases on milk material imports need more consideration.
MARD has officially asked for milk import tax increases in order to help farmers sell milk domestically. What is the viewpoint of the Tax Policy Department on this issue?
We have not received a document on the issue. However, I have to remind you that farmers have been having difficulties selling milk not because of the low tax, but because of the melamine scandal. Recently, some dairy producers could not sell products because consumers feared that the products contained melamine. As they could not sell products, they reduced the volume of milk they purchased from farmers.
Therefore, in this case, import tax increases would be the wrong prescription. We need to analyse the situation and find out the main reasons for farmers’ slow milk sales. If you give the wrong medicine, the patient will not get better.
Do you mean that the viewpoint of the Tax Policy Department is that it is not necessary to raise import taxes at this moment?
Yes, I do, and because the key problem behind the slow sales of milk before was the melamine fear, not because of low prices in the world.
If MARD proposes a tax increase, we will have to consider it thoroughly. We will have to consult with other ministries and branches, including the Ministry of Industry and Trade, which is managing production and local consumption, and consumer rights protection associations.
Analysts have said that if there are tax increases, finished dairy product prices will increase. Do you think so?
Currently, domestic sources only can provide a very small proportion of the milk materials needed for production. Therefore, tax increases could lead to the price increases of finished products, thus causing difficulties for dairy producers and consumers.
Milk tax increases have been discussed already and faced protests.
Tax policies can benefit some groups of subjects and badly affect others. Therefore, we needed two meetings to decide the paper tax increase.
So, I think that we need to consider whether tax increases can ensure the better sale of milk materials, and whether enterprises are in fact not purchasing milk from farmers because of high prices.
Nguyen Xuan Duong, Deputy Head of the Animal Husbandry Department under MARD: tax increase is just an immediate solution
The suggested tax increase should be seen as one of many measures to help farmers restore and develop the herd of milk cows. Currently, Vietnam’s milk cow husbandry industry just can provide 20% of the materials necessary for production, while the other 80% still needs to be fed by imports. An agricultural country like Vietnam should not maintain such a high level of imports.
In the strategy on milk cow farming development, we strive to provide 40% of the local demand for milk materials for production.
Do you mean that we will have to apply a lot of comprehensive measures to develop the herd of milk cows, while tax increases are just one of the measures?
Yes. Raising taxes is just a temporary solution as we have to follow our WTO commitments on slashing taxes. MARD thinks that at this moment, raising taxes is very necessary as this can help the husbandry industry ‘agglomerate’ money which it will use for re-investment.
VietNamNet, Tuoi tre
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