The new automobile tax will apply as scheduled when
the Special Consumption Tax becomes effective on Wednesday, April 1,
the Finance Ministry has confirmed.


The confirmation should quash speculation that the tax
would be delayed to help the industry in its struggle against the
contracting global economy.


The National Assembly approved the new Special Consumption Tax at its November plenary session.


It sets the tax according to engine capacity for
vehicles of less than 10 seats rather than their carrying capacity and
will range from 40 to 60 per cent.


The prevailing tax is: less than six, 50 per cent; from six to 15 seats, 30 per cent and from 16 to 24 seats, 15 per cent.


The tax for bigger vehicles will still be calculated from their carrying capacity.


The tax for 10-15 seaters will be 30 per cent and 16-24 seaters 15 per cent.


Stocking up on imports


The prospect of the new tax has prompted traders to heavily import new vehicles.


Both the Ministry of Industry and Trade and the Viet
Nam Automobile Manufacturers' Association have asked the Government to
temporarily suspend the special consumption tax; the value added tax
and registration fees to help car makers and traders eliminate the
growing stockpile of vehicles.


The ministry's figures show that about 110,000
automobiles were sold in the first nine months of 2008 - and car makers
and traders had expected to sell another 130,000 automobiles in the
last months of the year.


But sales were 50 per cent less than forecast.


Many manufacturers have now had to stop production and the number of workers has been reduced between 20-30 per cent.


The Government should now delay introduction of the
new tax to bus and vehicles that serve production and services, argues
the Ministry of Industry and Trade.


The new special consumption tax for automobiles is
forecast to provide the Government with an extra VND700 billion (US$40
million) in revenue each year.


About VND400 billion of this will be raised from made-in-Viet Nam vehicles.