Coal export tax is not a “give-and- take”

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Báo QĐND English - 68 month(s) ago 15 readings

Coal export tax is not a “give-and- take”

The coal industry has recently proposed reducing tax rates for coal exports from 20 percent to 0 percent. The proposal is said to be motivated by greed.

Vietnam National Coal - Mineral Industries Holding Corporation Limited (Vinacomin) has asked the Government to consider its proposal to reduce export tax rate on account of slow domestic consumption, sharp fall in export coal prices, high unsold inventories and low sale prices.

The coal industry has also estimated that if sale prices for electricity production are not adjusted, it will suffer a loss of approximately VND 8,500 billion in 2012.

Reduction in export tax rates on coal, a strategic and sensitive product for energy security, is a thorny issue for relevant agencies to properly manage and ensure the effective use of the country’s natural resources.

Like other economic sectors, the coal industry had large inventories with 7.5 million tones left unsold by the end of the first quarter of this year. This was due to job losses and lower incomes for more than 138,000 miners as well as lack of investment capital for production.

The coal industry’s tax reduction proposal sounds reasonable in the face of rising electricity prices over the past few years.

However, it is considered as abnormal since coal is classified as a special product that significantly contributes to ensuring energy security and boosting national industrial development.

The coal industry’s strategy for development until 2020 with a vision for 2030 adopted by the Prime Minister earlier this year underlines the need to gradually reduce export volumes and increase coal imports to meet the growing domestic demand for coal consumption in the years to come.

However, the problem is that the deposit of natural coal, known as a “black gold”, is limited and cannot be renewed.

To help increase State budget revenues, coal export tax rates have been readjusted gradually from 5 percent to 10-15 percent and 20 percent so far.

Under the export roadmap for 2006-2010 with a vision for 2020, coal export volumes will drop from 11 million tones in 2007 to 10 million tonnes in 2008, 9 million tonnes in 2009 and 8 million tonnes in 2010 in order to put a complete stop to exports in the near future.

However, coal export volumes are always maintained at double-digit figures. Despite predicting imports of 30-60 million tones per year after 2015, the coal industry still has a plan afoot for continual coal exports.

There is growing concerns about severe coal shortages that might adversely affect development plans of other economic sectors such as electricity, cement, iron & steel, fertilizer, chemicals and paper.

In fact, the coal industry contributes just 20-25 percent of its total revenues to the State budget - not enough for developing infrastructure and dealing with environmental issues in the long run. Therefore, limiting coal exports is an urgent solution to help transform the model of economic growth and control the exploitation of natural resources.

The proposal for reducing export tax rates to zero percent is not just meant for ensuring stable jobs and incomes for more than 138,000 coal miners and half a million people in the northern province of Quang Ninh who mostly live on coal exploitation.

The crux of the matter is that natural coal deposits in Quang Ninh are not rich enough for miners to exploit in the next few decades.

Source: VOV

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