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Vietnamese Tax Policy Overhaul Needed For 'Greener' Growth

by Mary Swire,, Hong Kong

15 January 2018

The International Monetary Fund (IMF) has said that Vietnam needs to overhaul its environmental tax policies to achieve its emissions-reduction goals.

In a new report for the territory on the territory's efforts to achieve greener growth, the IMF said Vietnam is among the top ten countries affected by air pollution. Further, greenhouse gas emissions are expected to double between 2010 and 2020 and triple by 2030.

According to the IMF report, electricity production from coal fired plants is a major contributor to air pollution, with a quarter of the domestic supply produced from coal. Without policy change to encourage greener energy production and discourage coal use, emissions will continue to track upwards alongside growth in the economy.

The IMF said: "The Vietnamese authorities recognize the challenges posed by climate change and a more sustainable, greener growth model is at the core of their development agenda. Vietnam ratified the 2016 Paris Agreement on Climate and committed to reducing greenhouse gas emissions by at least eight percent by 2030 and to achieving the United Nations Sustainable Development Goals (SDGs) by 2030."

It said Vietnam must lower the intensity of fossil fuels in Vietnamese economic output, stating "raising the contribution of renewable energy would help to break the link between greenhouse gas emissions and output."

On policy, the IMF said Vietnam must provide stronger incentives for households, firms, and Government to pursue green growth, recommending that taxation of fossil fuels must fully price their environmental and health externalities.

Tax policy should seek to nudge energy demand toward renewables and generate revenue to finance adaptation and mitigation plans, the IMF said.

TAGS: environment | tax | value added tax (VAT) | energy | International Monetary Fund (IMF) | environmental tax | Vietnam | Tax

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