Vietnam considering cutting gasoline tax, electricity prices

What happened

Vietnam is proposing to cut its special consumption tax on all gasoline grades to zero from November 1 through March 31 next year and may reduce retail electricity prices, pending approval. The government is targeting inflation of 4.5% this year.

Proposed

Global impact / market context

Lower fuel and power taxes would reduce costs for households and businesses, which could ease inflation running at 5.08% in September. That matters for Vietnam's goal of reaching at least 10% growth this year, since cheaper energy leaves more money for spending.

Analyst inference

Vietnam's economy grew 9.95% in the third quarter, and fourth-quarter growth must exceed 12% to hit the annual target. In this setting, energy tax and price proposals are a policy response to inflation pressure, with details still awaiting approval.

Analyst inference

What to watch

1. The gasoline tax cut is proposed from November 1 through March 31 next year, and the current tax ranges from 7% to 10%. Confirmed
2. Deputy Prime Minister Nguyen Van Thang asked the finance ministry to review the legal basis, feasibility and impact of reducing the gasoline tax to zero. Proposed
3. State utility EVN was told to recalculate costs and maximise savings so an average retail electricity price cut is possible. Proposed

Evidence

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