How high should the petrol price be?

Opinions still vary about whether to collect road maintenance fees through petrol purchases. If yes, the petrol price would rise too high, becoming unaffordable for many people.

Just within half a month, the Ministry of Finance decided to slash petrol prices twice, by 1000 dong per litre. Still, consumers are not thrilled about the price decreases, because they worry that if the Government approves the plan to collect road maintenance fees through petrol, the price will increase by 1000 dong per litre yet again.

Petroleum products are input materials for many industries, so the rise and fall in prices always has a big impact on production and people’s lives

According to Dau Tu newspaper, a litre of petrol bears too many kinds of expenses. A litre of A92 petrol is sold at 16,000 dong, covering 6200 dong in fees and taxes, including 1800 dong in import tax, 1000 dong worth of luxury tax, 1200 dong worth of value added tax and other fees.

As such, taxes and fees alone account for nearly 40 percent of the price. The proportion will be even higher if the Ministry of Transport’s proposal to collect road maintenance fees through petrol purchases is approved.

Economists have pointed out that in the US, which has the best road system in the world, taxes and fees only account for 16 percent of the price of gas.

Nguyen Tien Thoa, Head of the Price Control Agency under the Ministry of Finance, agrees on collecting road maintenance fees, but he does not think that it is necessary to collect it through petrol purchases. He suggested that there are many different channels through which the fee can be collected and he added that fee collection through petrol purchases may not be the best solution.

According to Ngo Tri Long, a renowned economist, the proposed fee of 1000 dong per litre is too high compared with the income of most people. The competitiveness of enterprises remains limited and people’s incomes remain low.

“If we charge a road maintenance fee on petrol, this will be unbearable for the majority of people,” Long stated, adding that people who use petrol, but do not drive, will also sustain a loss.

“I think the reasonable fee is 500 dong or lower,” Long calculated.

Nguyen Van Quyen, a senior official of the Ministry of Transport and the author of the plan on to collect road maintenance fees through petrol, still believes that his is the best solution.

According to Quyen, 1000 dong per litre is reasonable. A motorbike will only pay 3000 dong for 100 kilometres, while other kinds of vehicles, like trucks, must pay more for 100 kilometres, because they use more fuel.

Quyen’s argument still does not persuade economist. Tran Du Lich, a National Assembly Economics Committee member. He argued that it would be very easy to collect the fee through gas purchases, but it results in higher prices. Once the petrol price increases, he continued, this will create higher rates for many goods and services, since petrol is an input material for production.

Dau tu

Tags: Vietnam petrol, Vietnam Petrol prices