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Higher taxes on car imports mooted to curb deficit
The Ministry of Industry and Trade has proposed a hike in import duties on cars and a new luxury tax on mobile phones to narrow the trade deficit, local newswire VnExpress reported Monday.
The ministry said it was suggesting this move because the trade deficit would widen in the last quarter given the usual year-end surge in imports of cars and mobile phones.
The trade gap in the first eight months totaled US$5.1 billion, down 67 percent from a year earlier, according to the General Statistics Office. But the ministry pointed out that the shortfall in July and August alone was 44 percent higher than the total figure of the first six months.
A 10 percent tax hike on imported cars of under 15 seats from the current 81 percent and a new special consumption tax on mobile phone will help curb imports and reduce the country’s trade deficit, the ministry said. It also proposed the government stops providing incentives to car buyers as soon as possible.
The government has provided a 50 percent cut in value added tax on cars since February. Vehicle registration fees of 10-12 percent were also halved in May. These incentives are slated to end next January.
The tax administration office of the Ministry of Finance is opposed to the tax hike proposal, saying it would have negative impacts on the local automobile market. It said the incentives that the government has been offering to local consumers should also stay through this year as planned.
The office also said it was not reasonable to impose special consumption taxes on mobile phones as the products are used widely by many consumers.
Vietnam’s trade deficit will probably narrow to $7 billion this year, according to Standard Chartered. The shortfall was a record $17.5 billion last year.
Thanh Nien
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