Special sales tax on automobile seen lower than proposed
30-AUG-2008 Intellasia | Saigon Times Daily page 2
Aug 30, 2008 - 7:00:00 AM
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The maximum special consumption tax on automobiles will rise to 70% if the government's proposed revisions to the law on this tax are approved, but the National Assembly Standing Committee has suggested the tax be reduced to 60%.
According to the draft presented by deputy Finance minister Do Hoang Anh Tuan on Tuesday to the committee, tax on almost all kinds of automobiles will be increased to 30%-70%. Under the current law, tax on automobiles is decided by number of seats, with those less than five seats subject to 50%, 6-15 seats to 30%, and 16-24 seats to 15%.
Phung Quoc Hien, chair of the finance and budget committee of the legislative body, said the proposed tax increases were so big and that this could rattle the market and affect automakers.
Therefore, the committee suggested there should be a schedule to gradually restrict the use of cars given Vietnam's poor infrastructure conditions and keep the market from being shocked. The committee also suggested reducing tax by at least 10 percentage points for each type of automobile compared to levels in the draft.
According to the draft, planes and yachts will be subject to special consumption tax. Those for private use will be imposed a tax of 15% and will enjoy a zero tax if they are for public transport services. However, the committee said this tax level was not reasonable and suggested increasing it to 30% as these are luxury goods.
The committee asked to have criteria to specify types of plane and yacht subject to the special consumption tax, especially those for both private use and public transport.
Motorbikes with an engine capacity of 175cc or higher will be taxed under the draft. The committee agreed with this but some in the committee said those with an engine capacity of125cc or higher should be taxed as these are mostly owned by well-to-do people.
Tax on beer and alcohol will be increased under the draft. The finance ministry suggested raising tax on draught and fresh beer from 40% to 50%, and cutting tax on bottled beer from 75% to 50%. Cutting these taxes is under the country's commitment when joining the World Trade Organisation and to create a single tax for all kinds of beer.
The ministry said that increasing tax on draught beer would bring 200 billion dong to the State budget but reducing tax on bottled beer would take away 1.5 trillion dong from the budget revenue a year.
The draft law on special consumption tax is expected to go before the National Assembly at its meeting late this year.
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