Vietnam plans to raise car taxes to save fuel
HANOI, Aug 21 (Reuters) - Vietnam, where car prices are already among the world's highest, is planning to raise taxes by up to 20 percentage points as part of efforts to cut fuel consumption and reduce traffic congestion.
Under a draft law, a special consumption tax would be raised to 60 pct for consumers who buy cars with 2.0 to 3.0 litre engines and 70 pct for cars with engines bigger than 3.0 litres, from 50 percent now, the Finance Ministry said in a report on Thursday.
"The tax increase is aimed at encouraging consumers to protect the environment and saving fuel," the Finance Ministry's report said.
The new tax regime is expected to be approved by the National Assembly, the country's legislative body, in November this year.
In addition to the consumption taxes, car buyers are also subject to a registration fee of up to 15 percent and 83 percent import tariffs for imported vehicles, making car prices in the Southeast Asian country one of the world's most expensive.
A DREAM COMES TRUE
Despite the steep price tags, which see the popular Honda Civic sedan retailing at nearly $40,000, the country's automobile sales more than doubled so far this year to more than 77,000 vehicles compared to the same period last year as more moneyed consumers traded motorcycles for cars.
Vietnam, with a population of more than 86 million, has only about 1.1 million cars and 21 million motorcycles but the roads are too congested to accomodate more cars.
At the annual car show, officially named "A Dream Comes True", that kicked off in Hanoi on Thursday, thousands crowded around the latest models from foreign car makers that have opened factories in Vietnam including Ford (F.N), Toyota (7203.T), Honda (7267.T), Mercedes Benz (DAIGn.DE), Fiat (FIA.MI) and Isuzu 7020.T.
In the emerging economy where annual per capita incomes still remain under $1,000 per year, owning a car is still a distant dream for many.
"I wish it would come true one day," said Tran Hoang Anh, a student in Hanoi as he admired a sleek Mercedes SLK sport car on display at the show. (Reporting by Nguyen Nhat Lam; Editing by Kim Coghill)
