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Tax down, but prices stubborn   2009-05-11 - TP

On May 1, the value-added tax (VAT) on many commodities like cement, bricks and tiles was lowered by 50%, but companies have not changed sale prices.


Nguyen Thanh Nam, Director of Dai Thanh Construction and Decoration Company in BInh Tan district in HCM City, said that he has been asked by many customers why cement prices have not been lowered in comparison with April’s price quotation as the VAT tax was cut from 10% to 5%.


The company’s price quotation released on April 25 shows that Ha Tien 1 brand name cement has the price of VND69,000/pack.


Nam said that he cannot lower the cement price, because he has to get cement from 1st class distributors at the same price. When Nam asked the distributor why the price has not been lowered yet, he was told that it was because the producer is still selling at the same price.

T, a big cement distributor in HCM City, confirmed the information, saying that only Fico brand name cement has seen a price decrease, from VND1.23mil to VND1.175mil/tonne.


Tran Minh Thinh, a business operating in the field of construction, said that the notices released by some cement producers like Nghi Son, Holcim and Phuc Son also mentioned a 50% tax cut. However, most of the enterprises have kept sale prices unchanged.


Thinh said that the purpose of the decision on lowering VAT tax was to stimulate demand and curb economic downturn. However, enterprises retain the money brought about by the tax cut, while customers do not benefit from the tax cut.


When asked why Ha Tien 1 had not cut sale prices despite the VAT tax reduction, a sernior official of the company said that the tax cut decision by the prime minister aimeda to support businesses so the company kept the post-tax price unchanged.


Ha TIen 1 brand name cement is now selling at VND1.26mil/tonne, including 5% VAT tax, the same as before May 1.


Meanwhile, Hoang Quoc Tuan, Deputy General Director of Dong Nai Brick and Tiles Company, affirmed that right after the information about the tax cut was released, the company adjusted sale prices.


The company’s hollow bricks are selling at VND1,050/brick, including 5% tax, down by VND50.

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