Lam Dong voters sent a petition to the Ministry of Finance on abolishing value-added tax (VAT) on electricity prices and applying the "one-priced electricity" mechanism to ensure fairness for users.
On October 15, on the Ministry of Finance's electronic information portal, the Ministry responded to this issue.
The Ministry of Finance believes that the proposal is not suitable in the context that electricity is a special commodity, subject to strict regulation by the State.
The Ministry of Finance said that according to current regulations, electricity is subject to VAT with a tax rate of 10%. The current Law on VAT has three tax rates of 0%, 5% and 10%, of which 0% is applied to exported goods and services; 5% to essential goods for life or agricultural output; and 10% to other common goods and services.
The current law does not stipulate the exemption or reduction of VAT on electricity, so the proposal to abolish VAT on this item has no legal basis.
Regarding the proposal to apply the "one electricity price" mechanism, the Ministry of Finance said it had asked for the opinion of the Ministry of Industry and Trade - a specialized management agency. According to the Ministry of Industry and Trade, electricity is a special item that cannot be stored and has the characteristics of simultaneous production and consumption. The electricity industry must mobilize power generation according to the principle of prioritizing cheap factories first, then go to higher cost sources to meet consumer demand.
With this feature, the terraced electricity price mechanism is considered suitable, to encourage people to use electricity economically and effectively. Many developed countries such as Japan, Korea or countries in the region also apply a similar mechanism, in which electricity prices at high levels increase gradually compared to the first level.
The implementation in Vietnam shows that, despite many controversies, this calculation method still achieves the goal of encouraging electricity saving and energy efficiency.
According to the Electricity Law, retail electricity prices are regulated in detail for each customer group, in accordance with the socio-economic situation of each period and the level of competitive electricity market, including: production, business, administrative and daily life.
For qualified customers, electricity prices are calculated based on the time of use during the day - including peak, off-peak and normal hours. In particular, the group of household customers is still applying the gradually increasing price mechanism, to promote the use of electricity economically, efficiently and in line with the national energy consumption regulation goal.
