Air conditioning is popular, excise tax does not change consumer behavior, so it should be abolished

Delegate Hoang Van Cuong - Photo: GIA HAN

On the morning of March 26, full-time National Assembly deputies discussed the draft Law on Special Consumption Tax (amended).

Is gasoline subject to both environmental protection tax and special consumption tax?

Regarding non-taxable objects, the report on explanation, acceptance and revision of the draft Economic and Financial Committee stated that there was a proposal to add non-taxable objects such as gasoline and air conditioners because these are essential goods.

Regarding gasoline products, in Vietnam, gasoline products have been subject to special consumption tax since 1995.

To encourage the use of biofuel, the Law on Special Consumption Tax has stipulated preferential tax rates for E5 gasoline at 8% and E10 at 7% (lower than the 10% tax rate applied to mineral gasoline).

This provision is consistent with the objective of special consumption tax which is to regulate consumption of goods that need to be used economically and is consistent with international practice.

In addition, in the context of environmental pollution and climate change being global issues, the Vietnamese Government's commitment at the COP26 Conference to achieve net emissions of "0" by 2050, along with other solutions, the current collection of special consumption tax on gasoline (including E5 and E10 gasoline) is appropriate, contributing to reducing emissions and orienting economical consumption.

Therefore, the Standing Committee requests to keep the draft law.

Regarding air conditioners, the collection of special consumption tax on air conditioners with a capacity of 90,000 BTU or less is being applied stably to raise awareness of limiting consumption as well as orienting consumption to save electricity and protect the environment.

However, as the delegate stated, the demand for refrigeration and air conditioning equipment in our country is increasing and becoming popular to meet the normal needs of people in conditions of increasingly high temperatures.

Therefore, absorbing the opinions of delegates, the drafting agency is considering a plan to limit the scope of air conditioners subject to special consumption tax.

Giving his opinion on the discussion, delegate Hoang Van Cuong (Hanoi) said that the main goal of special consumption tax is to change consumer behavior, limit the consumption of products that are harmful to health, have negative impacts on the community, and switch to more beneficial alternative consumer products, thus having the goal of raising budget revenue. However, this is not the main goal of special consumption tax.

Mr. Cuong cited that the draft still includes air conditioners in this taxable list and the drafting committee is studying a plan to limit the scope, but it is clear that they are still subject to tax.

"Air conditioners are popular consumer products and there is really no substitute. No matter how high the tax is, people still have to use them. Restricting certain groups of people still does not change their behavior. Therefore, I propose removing air conditioners from the list of subjects subject to special consumption tax," he emphasized.

Delegate Nguyen Truong Giang (Dak Nong) also stated that with essential goods, such as gasoline, it is impossible to limit their use.

"Gasoline is subject to both environmental protection tax and special consumption tax, is that true?", Mr. Giang said, adding that it is possible to increase environmental protection tax if necessary.

Similarly, according to Mr. Giang, there should be no tax on air conditioners, because they are essential goods. This product is also being applied with technology to save electricity.

"There should be no special consumption tax on gasoline and air conditioners with 90,000 BTU or less," said Mr. Giang.

Deputy Minister of Finance Cao Anh Tuan - Photo: GIA HAN

Reviewing the special consumption tax on air conditioners

Explaining later, Deputy Minister of Finance Cao Anh Tuan clarified that regarding air conditioning, the National Assembly Standing Committee had previously given its opinion and the ministry had coordinated with the Economic and Financial Committee to review it.

He agreed with many opinions that special consumption tax helps regulate, adjust, and change consumer behavior.

"With air conditioners, the Government proposed the target of 90,000 BTU or less, but since the delegates have given their opinions, we have reviewed them. However, many opinions say that with popular, common types used by many families, we will review and propose air conditioners from 18,000 BTU or less and from over 18,000 BTU to under 90,000 BTU," said Mr. Tuan.

Regarding gasoline, Mr. Tuan said he had reported at the meeting of the National Assembly Standing Committee, but today the delegates continued to express their opinions.

He said that gasoline has been subject to special consumption tax since 1995, for 30 years now. The Ministry has reviewed the experience of countries such as Germany, France, Italy, England, South Korea, Thailand, Singapore, Laos, Cambodia... all of which collect it. In addition, there is an environmental protection tax.

"The environmental protection tax is collected absolutely, but the special consumption tax is collected at a percentage." The special consumption tax rate for biofuel is 8% for E5 and 7% for E10, a lower rate than that for regular gasoline of 10% to encourage the use of biofuel. If we remove it, we will not encourage the use of biofuel," Mr. Tuan added.

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Source: https://tuoitre.vn/dieu-hoa-pho-bien-danh-thue-tieu-thu-dac-biet-khong-thay-doi-hanh-vi-tieu-dung-vi-vay-nen-bo-20250326094602283.htm