HA NOI — The Ministry of Industry and Trade (MIT) has suggested that six to nine-seat vehicles should be subjected to a lower special consumption tax to boost the local automobile industry.

In an official document sent to the National Assembly’s Standing Committee last week, the ministry said they should be taxed 10 per cent less than cars with less than five seats – and 10 per cent lower than that outlined in a draft proposal by the Ministry of Finance (MoF).

This would mean, depending on cylinder size, six-to-nine-seat cars paying a 40 per cent tax instead of 50 per cent as proposed by the MoF. And it would set them apart from six-to-15-seat vehicles presently taxed at 30 per cent.

MIT Deputy Minister Bui Xuan Khu argued the six-to-nine seat cars were multi-functional and mainly served family needs, therefore promoting their use fitted in with the country’s infrastructure.

Besides, he said these cars were included in localisation strategies by some companies. For example, the best-selling Innova produced by Toyota Viet Nam had a localisation rate of 37 per cent.

According to the ministry, a preferential tariff for this type of vehicle would increase the sale of cars in Viet Nam, helping to develop the domestic automobile industry.

The MIT suggested taxes on other types of vehicles should be maintained as outlined in a draft submitted by the MoF.

Under the draft law, cars with less than 10 seats with cylinder capacity of 2,000cc or less would pay a tariff of 50 per cent.

Cars from 2,000 to 3,000cc would pay 60 per cent, and those over 3,000cc, 70 per cent.

The tariffs would be applied to both locally-produced and imported vehicles.

The MoF said the present 30 per cent tariff on six to 15-seat cars was not reasonable.

However, six-to-nine seaters, used mostly as family transport, paid a tax equal to 60 per cent of the tax on cars with less than five seats, which are considered luxury vehicles. Therefore, the MoF said it wanted to lift the tax rate on six-to-nine seat cars.

Nguyen Thi Cuc, Chairwoman of the Tax Consultants Association, said she agreed with opinions that tax should be imposed depending on cylinder capacity, but argued that a tax discrimination between car with less than five seats and six-to-15 seaters should be maintained as it still suited the country’s real situation.

The proposed draft would push the car market into a negative growth cycle, which would be fatal to the local automobile industry, a representative of Honda Viet Nam said.

In official document No 4678 on June 4, the MIT had agreed with the draft law. And to reduce the number of vehicles on the roads causing traffic jams, it had suggested some measures to limit car importation.

As a result, the number of imported cars decreased in July and August.

However, after two months, the ministry changed its mind. — VNS