Tin Pháp lý
Paper import tax increase proposal not hailed

24 March 2009
The Ministry of Industry and Trade (MOIT) has recently asked to raise the import tax on newsprint, printing and writing paper imported from Asean countries from 3% to 5% in an effort to protect local production. However, the proposal has not been welcomed.

Prior to that, the Ministry of Finance on February 10 promulgated a circular on raising the import tax on newsprint from 20% to 29%, on printing and writing paper from 25% to 29% in the case of goods imported from non-Asean countries.

Pham Trung Thong, deputy Head of the Printing Management Division under the Publication Agency of the Ministry of Information and Communications, said that he did not agree with the tax increase, an opinion he expressed at the meeting organised by the Ministry of Finance on March 19 to discuss the issue.

MOIT made the suggestion after it considered the very large stocks of paper producers, some 100,000 tonnes at present.

However, Thong said that big stocks prove to be not a new problem of the paper industry. He stressed that this once happened in 1990 and nothing has changed since then.

"Shortage and unsalability are the traditional problems of the paper industry," Thong said.

He went on to say that the main reason for the big stocks is that producers and distributors do not have sales policies which fit the market economy's conditions.

In early 2008, when the world's economy fell into recession and prices skyrocketed, though domestic paper prices increased 4-5 times, the supply of paper still could not meet the demand and enterprises had to queue to purchase paper.

The government had to create favourable conditions to import paper to serve the domestic demand.

Regarding the paper price, Thong pointed out that despite the big stocks, the domestic price is still one million dong per tonne higher than that of import products.

"It is really unreasonable that imports, which have to travel a long distance to arrive in Vietnam, and bear the import tax rate of 3%, are still cheaper than domestic products," Thong said.

While officials of some relevant ministries argue that the modest tax increase from 3% to 5% would not affect people much, Thong disagreed, saying that this could have large impacts.

There are some 22 million students going to school, or one fourth of the total population, which means 11 million families, including a lot of poor and financially incapable ones. They will have to pay 2% or more for textbooks for their children, he argued.

"It is really a big problem if enterprises have to import paper at higher tax rates, or purchase domestic products at higher prices, especially as the government now has to spend a lot of money to stimulate demand," he said.

Analysts also believe that the problems of the paper industry should not be settled by a tariff. In fact, tax increases and decreases have been applied many times but have solved nothing. They say that the paper industry should stand on its own two feet to grow rather than rely on the state's support and higher taxes.
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