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Taxes aren’t causing high milk prices, say experts
The retail price of milk is likely to keep going up under a plan by the Ministry of Finance to increase import taxes on milk. Experts spoke with Tuoi tre (Youth) newspaper about the high cost of milk.
* Vu Van Truong, head of the Ministry of Finance’s Tax Policy Department
Different tax levels for different powdered milk products may be unreasonable. The Ministry of Finance has proposed two plans to adjust tax levied on a number of powdered milk products.
When the Viet Nam Standard and Consumer Association was asked about the plans, we stated that the tax levied on milk products should include both increases and decreases.
Regarding the 2 per cent increase in the tax levied on milk products that are not mixed with sugar and the tax levied on sweet milk (from 3 per cent to 5 per cent), we estimate that its impact will not be great enough to lead to an increase in milk prices. The price of certain milk products may not rise by more than VND100 when the new tax is applied. If a tax rate of 7 per cent is applied, instead of the current 7-10 per cent, a number of milk products may go down in price.
* Nguyen Minh Phong from the Ha Noi Socio-economic Research Institute
With an adjustment of between 2-3 per cent, the milk price will not suffer much. However, milk prices in Viet Nam are already high and consumers have had to suffer for a long time. Tax adjustments should take into account unpredictable socio-economic impacts.
In my opinion, shortcomings remain in the country’s milk-price management, particularly the regulation that states that those businesses that increase milk prices over a 15-day period by more than 20 per cent will have their milk product prices stabilised. It is too easy for businesses to take advantage of this regulation. Besides, the State can put a ceiling price on milk products where a monopoly is involved. This ceiling price will be based on prices in other countries in the region. It is essential to allow a profit of between 20-50 per cent. That some businesses post a profit of up to 250 per cent is unacceptable when other businesses find it hard to earn a profit of 15 per cent.
* Ho Tat Thang, Vice Chairman of the Viet Nam Standard and Consumer Association (Vinastas)
World milk prices have dropped dramatically and are unlikely to rise in case of tax increases. However, prices of several kinds of milk products have gone up. Many milk agents decided to increase milk prices themselves to boost profits as a result of reduced supplies from milk producers. Talk about tax increases will motivate agents and businesses to increase milk prices.
Vinastas recommends that businesses are not given an excuse to raise prices. The association does not oppose adjusting the tax levied on milk products, which will help increase the budget, but we think the timing is inappropriate.
* Dr. Do Kim Tuyen from the Ministry of Agriculture and Rural Development’s Husbandry Department
The current tax level of 3-5 per cent on a number of milk products in Viet Nam is too low in comparison with the country’s World Trade Organisation tax commitment. The problem is that tax levels are low but global milk prices have dropped and the milk price in Viet Nam is still high and rising.
I, like many other people, disagree with adjusting the tax on milk products because it can lead to an increase in milk prices. However, in Viet Nam, milk prices rise even when the tax on milk products is reduced. So the most important consideration is how we keep both quality and prices under control to ensure a healthy market mechanism.
vietnamnet, vietnamnews
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