On March 10, the National Assembly Standing Committee discussed the revised draft of the Special Consumption Tax (amended).

The draft law stipulates that air conditioners with a capacity of 90,000 BTU or less—except those designed solely for installation in transportation vehicles such as cars, train carriages, ships, boats, or airplanes—are subject to the luxury tax.

If organizations or individuals produce and sell, or import separate components such as outdoor or indoor units, the goods sold or imported (outdoor or indoor units) are still subject to the luxury tax, just like a completely built product.

Additionally, the draft law also imposes a luxury tax on all types of gasoline.

According to Le Thi Nga, Standing Deputy Chair of the Committee on People’s Aspirations and Oversight, the draft law still designates all types of gasoline as items subject to luxury tax, but she does not agree with this. 

She emphasized that the special consumption tax targets luxury goods which are not encouraged for consumption. Meanwhile, gasoline is an essential commodity, indispensable in people’s daily lives.

“Imposing a special consumption tax on an essential item for the public contradicts the nature and purpose of this kind of tax,” Nga said.

She recalled that at the previous Standing Committee meeting, as well as during group discussions at the National Assembly sessions, she raised her voice about taxation on gasoline. Mass media have also recorded many people proposing the removal of luxury tax on the product. However, no explanation has been provided.

She urged the compilation and reviewing agencies to provide further clarification. “So far, I haven’t seen any explanation in the report justifying the need to retain the special consumption tax on gasoline. I propose removing this tax on gasoline,” Nga said.

As for air conditioners, she said 10 years ago, this was considered a kind of luxurious good, but now is listed as essential goods.

“We propose not imposing a luxury tax on gasoline and air conditioners. If it’s not removed, there needs to be further justification as to why essential goods are subject to this tax,” she said.

Hoang Thanh Tung, Chair of the Committee on Legal and Judicial Affairs, agreed with Nga’s viewpoint on luxury tax exemption applied to gasoline and air conditioners.

Tung emphasized that gasoline is a highly essential commodity and an input for the economy, used by everyone in daily life. He argued that it is not truly a luxury item warranting a special consumption tax, especially since gasoline is already subject to an environmental protection tax.

He believes that now is the time to review and consider whether to continue classifying gasoline and air conditioners as luxury goods and subject to luxury tax. 

Other National Assembly deputies discussing the draft law at the 8th session also expressed their opinion urging reconsideration of this issue.

“From rural areas to urban centers, hardly any household lacks one or two air conditioners. Labeling air conditioners with capacities of 90,000 BTU or less as luxury items and subjecting them to the special consumption tax is no longer appropriate. If this policy continues, there must be a very specific and convincing explanation,” Tung stressed.

In response, Phan Van Mai, Chair of the National Assembly’s Committee on Economics and Finance, suggested that if not imposing luxury tax on gasoline, raising environmental protection tax may be considered instead. The drafting and reviewing agencies would reassess the matter and, if necessary, seek further opinions.

Deputy Minister of Finance Cao Anh Tuan explained that the demand for cooling devices and air conditioners in Vietnam has surged in recent years.

Although some air conditioners have adopted new technology to reduce environmental harm and save electricity, they still use various refrigerants, many of which harm the environment and the ozone layer, and have the potential to contribute to global warming. 

Many countries such as South Korea, India, and Norway impose a luxury tax on HFCs used in air conditioners. In Europe, to save energy, many countries restrict air conditioner use. Therefore, the drafting agency believes it is necessary to continue imposing the special consumption tax on air conditioners with capacities of 90,000 BTU or less to raise awareness about limiting consumption, saving electricity, and protecting the environment.

Regarding gasoline, the Deputy Minister of Finance noted that fossil fuels are non-renewable resources, and energy conservation is essential. Most countries impose special consumption taxes on gasoline.

In Vietnam, the special consumption tax on gasoline has been in place since 1995 and has remained stable. 

Tam An