In reply to the Ministry of Finance's letter regarding input on the draft decree concerning environmental protection fees for emissions (the Draft), the Vietnam Chamber of Commerce and Industry (VCCI) believes that there remains a conflict between fees and environmental protection taxes.

According to the Environmental Protection Tax Law of 2010, "Environmental protection tax is a kind of excise tax imposed on products, goods (commodities) when their use has adverse effects on the environment." Products such as gasoline, diesel, and coal fall under the category subject to environmental protection tax. The reason these products are subject to tax is due to the negative environmental impact when they are burned, emitting pollutants into the environment.

Specifically, in Proposal No. 24/TTr-CP dated April 6, 2010, submitted by the government to the National Assembly on the Environmental Protection Tax Law project, coal was included in the taxable category because "when coal is used for combustion, it emits gases like CO2 and SO2, all of which have adverse effects on human health.”

VCCI: Overlap between Fees and Environmental Protection Taxes (Illustrative Image)

The draft proposal continues to suggest imposing fees on industrial emissions such as dust, CO, SOx, and NOx. Therefore, industrial facilities using coal and gasoline and diesel for combustion in the production process will continue to pay environmental protection fees in addition to environmental protection taxes for the same activity. The review report on the Environmental Protection Tax Law project, numbered 1287/BC-UBTCNS12, dated April 21, 2010, by the National Assembly's Finance-Budget Committee of the 12th term, pointed out the risk of overlap between environmental protection fees and taxes for coal products.

VCCI assesses that environmental protection fees have advantages over environmental protection taxes in terms of influencing behavior. Environmental protection fees control outputs, including factors related to combustion technology, emission treatment measures, and discharge locations, which are not controlled by environmental protection taxes. Thus, environmental protection fees incentivize waste producers to improve combustion technology, enhance emission treatment methods, and choose more suitable discharge locations. However, monitoring environmental protection fee collection is more complex than monitoring environmental protection taxes.

VCCI also recommends that the drafting agency adjust the content of the draft to avoid this overlap while presenting some alternatives.

Specifically, it proposes regulations for deducting the excise tax that production facilities have already paid when purchasing coal, gasoline, and diesel as inputs for the production process when reporting environmental protection fees for emissions.

In cases where it is found that monitoring tax deduction is overly complex and costly, it may be proposed to the National Assembly to eliminate environmental protection taxes on coal and instead only collect environmental protection fees.

Regarding emission areas, VCCI believes that the current draft lacks differentiation in environmental protection fee levels based on emission locations. In practice, emitting gases in urban areas and residential areas poses a greater risk to human health than in non-urban areas.

Therefore, the drafting agency is suggested to consider a policy of concentrating environmental protection fee collection for waste sources in urban and residential areas that have not yet been taxed or are subject to lower fees than other areas. This policy will motivate businesses to establish or relocate production facilities to non-urban areas, helping reduce environmental pollution in concentrated urban areas. 

According to Hai Linh (Cong Thuong Newspaper)