Maintaining low environmental taxes: Economic benefits and green development problems

VTV.vn - The National Assembly maintains low environmental protection tax until 2026, helping to curb inflation and support businesses, but creating challenges for green energy conversion.

Anti-inflation solutions: A stable hedge in volatile times

Recently, the National Assembly Standing Committee voted to pass a Resolution on environmental protection tax (EPT) on gasoline, oil, and grease applicable for 2026. This decision maintains the same low tax rate as in 2025: gasoline (except ethanol) remains at VND2,000/liter; diesel is VND1,000/liter; fuel oil, lubricants, and grease are all at VND1,000/liter or kg; kerosene is VND600/liter; only jet fuel is adjusted to increase slightly from VND1,000/liter to VND1,500/liter.

According to economic experts, this decision is an important fiscal measure, clearly demonstrating the Government's priority in stabilizing the macro economy and controlling inflation in the context of many volatile international situations. According to the Ministry of Finance 's report, keeping the tax rate low helps reduce input cost pressure for many manufacturing, transportation and consumption sectors.

The National Assembly Standing Committee's decision to keep environmental protection tax on gasoline at a low level until the end of 2026 is an important macroeconomic decision, but poses a big problem for the national green energy transition roadmap.

Deputy Minister of Finance Nguyen Duc Chi emphasized: "If environmental protection tax is increased from 2026, retail gasoline prices will increase, causing the average CPI to increase by about 0.1-0.3%. This will put significant pressure on the target of controlling inflation and economic growth." Maintaining low tax rates is expected to reduce budget revenue by about more than VND41,000 billion compared to the ceiling level, but this is a necessary trade-off to support production and business recovery.

The business community, especially transport and logistics enterprises, has welcomed this decision. Mr. Tran Huu Dinh, Chairman of the Southern Freight Transport Association, shared that gasoline accounts for a large proportion of the transport cost structure. Maintaining a low tax rate is like a 'safety valve', helping businesses reduce the burden of direct costs, stabilize freight rates and indirectly support the stabilization of prices of final consumer goods.

However, the slight increase in the fuel tax to VND1,500/liter is to ensure fairness among economic sectors. The aviation industry has enjoyed many incentives and recovered strongly after the pandemic, so this adjustment is necessary to balance the tax policy between air transport and road, rail or waterway transport.

Green roadmap and long-term market signals

While keeping the environmental tax low brings short-term benefits, it also raises a major question about the real role of the environmental tax in the national green transition strategy and Net Zero 2050 commitment.

Environmental taxes are an important financial tool to help hold polluters accountable for their environmental impact. The long-term goal of such taxes is to shift consumers and businesses to cleaner energy and reduce emissions. However, keeping the tax low, at half the cap, would economically reduce the deterrent effect on fossil fuel use.

The reduction in budget revenue from environmental protection tax puts pressure on the Environmental Protection Fund and financial resources for green projects and pollution treatment.

The National Assembly's Economic and Financial Committee has recommended that the Government should soon come up with a solution to compensate for the stagnation of green projects. Proposed alternative solutions include: strengthening the fight against revenue loss, fighting transfer pricing in tax administration, and researching carbon pricing tools (such as the emission trading system) to create new revenue sources. Finding alternative revenue sources is an urgent task to ensure budget balance and maintain the roadmap to implement the Net Zero 2050 commitment.

Dr. Nguyen Minh Phong, an environmental economist, said that postponing the increase in environmental protection tax is necessary in the short term to curb inflation. However, Vietnam has committed to Net Zero by 2050. To do so, a clear roadmap is needed, in which environmental taxes and fees must be gradually restored to the ceiling level, creating incentives for electric vehicles, renewable energy and green transportation. Prolonged low taxes can create a 'habit' for the market, making it more difficult to adjust the increase later.

In addition, the reduction in budget revenue from environmental protection tax puts pressure on the Environmental Protection Fund and financial resources for green projects and pollution treatment. The National Assembly's Economic and Financial Committee recommends that the Government strengthen revenue management, prevent revenue loss, control budget expenditure, and find alternative sources of revenue to compensate for this support.

Thus, the Resolution on environmental protection tax rates in 2026 is a necessary and timely move to protect the economy from inflationary shocks and support businesses in the short term. However, in the long term, there needs to be a detailed plan and a clear roadmap to bring the tax to the ceiling, or to build strong fiscal and credit tools and carbon pricing mechanisms, so as not to deviate from the committed sustainable development goals and green energy transition./.

Source: https://vtv.vn/duy-tri-thue-moi-truong-thap-loi-ich-kinh-te-va-bai-toan-phat-trien-xanh-100251020221857068.htm