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Tax slashed, petrol price remains stationary   2009-02-20 - VietNamNet

The Ministry of Finance has slashed the petrol tax by another 5% to 20% in an effort to help ease the burden on petrol distributors. However, the distributors said that no price decrease will happen at this moment.


Petrol distributors said that the tax reduction has not surprised them. Prior to that, distributors reported to the state management agencies that they were incurring heavy losses due to the world’s increasing petrol prices and asked for permission to raise retail prices.


However, they were told that the Ministry of Finance has not agreed to the price increase at this moment. As a result, the tax decrease has been released as an action to ‘soothe’ the enterprises, which have been suffering from loss.


In a report to the Government, the Ministry of Finance said that with the 25% import tax rate, enterprises have been incurring the loss of VND500 for every liter of petrol sold.


However, enterprises argued that the actual loss is bigger than VND500/liter. Petrolimex, a big petrol importer and distributor, which holds 60% of the market share, said that it is incurring a loss of VND1,000/liter. Meanwhile, smaller distributors, like Saigon Petrol, is incurring the loss of nearly VND1,500/liter.


Meanwhile, the enterprises said that the 5% tax decrease is just equal to the price decrease of VND500/liter.


The enterprises have also said that the modest tax price decrease can help enterprises reduce loss, while cannot help them make profit. Therefore, they said, people should not expect any price decreases at this moment.


They also said that the expenses for importing petrol have been increasing due to the dollar price increases against the VND. The world’s petrol price is now staying at $62/barrel, but the import price in VND has been increasing.


With the decision to slash the petrol import tax, the Ministry of Finance, once again, affirmed its viewpoint not to raise the petrol price at this moment. Meanwhile, in document No. 1844, the ministry’s price control agency suggested that enterprises could slash the retail price of kerosene, since the kerosene price has been staying at low level since the end of January 2009.


The price control agency has asked enterprises to send reports about the current kerosene prices and urged them to register new kerosene prices in accordance with the world price performance. The reports must be sent to the Ministry of Finance prior to February 20, 2009.


Enterprises said that the kerosene price decrease proves to be possible. However, kerosene just accounts for a small proportion in the total consumption of oil products, and therefore, the price decrease of the product does not have much significance in regulating the market.


The decision on the 5% tax decrease will be effective as of February 23, 2009. This is the third time the tax on petrol and oil products has been decreased.


The world’s crude oil price is now staying at $37/barrel, while the petrol price remains high at over $60/barrel.

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