VIETNAM – To help the struggling domestic plastic packaging industry, the Ministry of Finance has recommended abolishing the Environmental Protection Tax on plastic bags, and refunding last year’s payments.
On 1 January 2012, the Vietnamese government imposed an Environmental Protection Tax on all plastic bags used to contain goods, as part of moves to cut the use of plastic bags in supermarkets and shopping malls by 40% by 2015.
A kilogram of plastic bags can incur a tax of up to VND 50,000 (US$2.30). Exempt from the tax are pre-packaged items and plastic bags that met the environmental criteria set by the Ministry of Natural Resources and Environment.
Since the tax was implemented, prices of plastic bags in Vietnam have soared by as much as 60%, as local consumers continue their habit of using plastic bags, and small traders and exporters have been hit particularly hard by the increased costs incurred.
To avoid the tax, many exporters have been importing environmentally friendly bags, thus affecting the domestic plastic packaging sector.
Concerned that the government might now have some difficulty achieving its socio-economic targets, the Ministry of Finance submitted a proposal at a recent online conference with local administrations to discuss economic tasks and expenditure in 2013.
Amongst the measures to ease businesses’ difficulties and revive the market, the Ministry had recommended abolishing the Environmental Protection Tax on plastic bags, and refunding last year’s payments.
If approved by the government, companies that paid VND30,000-50,000 (US$1.40-$2.30) per kilogram on the bags from January 1 last year will get their money back.