The government has cut import tariffs on oil products by 3-5 percent in an attempt to stabilize local pump prices as global prices rise, an official said.
Nguyen Tien Thoa, head of the Price Management Department at the Ministry of Finance, said the tax cuts took effect on Wednesday. The new tax rate on gasoline will be 17 percent from the previous 20 percent while the tariffs on kerosene and diesel were lowered to 10 percent from 15 percent.
Fuel traders had previously asked the government to reduce import taxes so that they can halt price hikes as ordered by the government. But the Finance Ministry rejected the requested, saying cutting taxes would be a last resort.
Instead the Finance Ministry two weeks ago allowed local fuel traders to offset their losses by extracting money from a state fund reserved for stabilizing fuel prices. The VND1.5 trillion fund has granted fuel traders VND500 per liter of gasoline and VND400 for every liter of kerosene.
Petrolimex, Vietnam's top oil product importer and distributor, said on Monday it was incurring a loss of VND1,403 on every liter of gasoline and VND500 per liter from the price stabilization fund would not be enough.