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: Stabilizing barriers in a volatile environment.

Recently, the National Assembly Standing Committee voted to approve a Resolution on environmental protection tax rates for gasoline, diesel, and lubricants applicable for 2026. This decision maintains the same low tax rates as in 2025: gasoline (excluding ethanol) remains at 2,000 VND/liter; diesel at 1,000 VND/liter; fuel oil, lubricating oil, and lubricating grease all at 1,000 VND/liter or kg; kerosene at 600 VND/liter; while aviation fuel is slightly increased from 1,000 VND/liter to 1,500 VND/liter.

According to economic experts, this decision is an important fiscal measure, clearly demonstrating the government's priority in stabilizing the macroeconomy and controlling inflation amidst a volatile international situation. According to the Ministry of Finance 's proposal, maintaining low tax rates helps reduce input cost pressure for many manufacturing, transportation, and consumer sectors.

The National Assembly Standing Committee's decision to keep the environmental protection tax on gasoline and diesel at a low level until the end of 2026 is an important macroeconomic decision, but it raises a major challenge regarding the national green energy transition roadmap.

Deputy Minister of Finance Nguyen Duc Chi emphasized: "If the environmental protection tax is increased from 2026, retail gasoline prices will rise, leading to an increase in the average CPI of approximately 0.1–0.3%. This will create significant pressure on the goals of controlling inflation and economic growth." Maintaining a low tax rate is expected to reduce budget revenue by more than 41,000 billion VND compared to the ceiling rate, but this is a necessary trade-off to support the recovery of production and business.

Businesses, especially transportation and logistics companies, have welcomed this decision. Mr. Tran Huu Dinh, Chairman of the Southern Freight Transport Association, shared that fuel accounts for a large proportion of transportation costs. Maintaining a low tax rate acts like a "safety valve," helping businesses reduce direct costs, stabilize freight rates, and indirectly support price stability for final consumer goods.

However, the slight increase in aviation fuel tax to 1,500 VND/liter aims to ensure fairness among economic sectors. The aviation industry has enjoyed many incentives and recovered strongly after the pandemic, therefore this adjustment is necessary to balance tax policies between air transport and road, rail, or water transport.

Green roadmap and long-term market signals

While maintaining low environmental protection taxes offers short-term benefits, it also highlights the larger issue of the true role of environmental protection taxes in the national green transition strategy and the Net Zero 2050 commitment.

Environmental protection tax is an important financial tool that helps hold polluters accountable for their environmental impact. The long-term goal of this tax is to encourage consumers and businesses to use clean energy and reduce emissions. However, keeping the tax rate low, only half the ceiling, will economically reduce the deterrent effect on the use of fossil fuels.

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

The National Assembly's Economic and Financial Committee has urged the Government to promptly find solutions to compensate for losses and prevent the stagnation of green projects. Proposed alternatives include: strengthening efforts to combat tax evasion and transfer pricing in tax administration, and researching carbon pricing tools (such as emission quota trading systems) to generate new revenue. Finding alternative revenue sources is an urgent task to ensure budget balance and maintain the roadmap for achieving the Net Zero 2050 commitment.

Dr. Nguyen Minh Phong, an environmental economics expert, believes 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 achieve this, a clear roadmap is needed, in which environmental taxes and fees must be gradually restored to their ceiling levels, creating incentives for electric vehicles, renewable energy, and green transportation. Prolonging low taxes could create a 'habit' in the market, making future adjustments more difficult.

Furthermore, the reduction in environmental protection tax revenue puts pressure on the Environmental Protection Fund and financial resources for green projects and pollution control. The National Assembly's Economic and Financial Committee recommends that the Government strengthen revenue management, combat tax evasion, control budget expenditures, and find alternative revenue sources to compensate for this support.

Thus, the Resolution on the environmental protection tax rate for 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, a detailed plan and clear roadmap are needed to bring the tax to the ceiling level, or to build strong fiscal, credit, and carbon pricing mechanisms, in order to avoid deviating from the committed sustainable development and green energy transition goals.

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