Pickup trucks, with their superior versatility, especially in cargo transportation and ability to access complex terrains, hold a significant market share in provinces and mountainous regions of Northern Vietnam. Recently, the proposal to increase the special consumption tax (SCT) on this vehicle line has sparked considerable debate. This article, from the expert perspective of Xe Tải Mỹ Đình, will provide an in-depth analysis of this issue, clarifying the potential impacts of the tax increase, and propose solutions to balance the interests of the state, businesses, and consumers.
Proposed SCT Increase and Market Concerns
In the draft amendment to the Law on Special Consumption Tax, one of the notable points is the proposal to apply a new tax rate to double-cab pickup trucks, also known as pickups. Accordingly, the SCT rate is expected to be calculated at 60% of the tax rate applied to passenger cars. This means that the SCT rate for pickup trucks could increase sharply, from the current 15%-20%-25% to 24%-36% and even 54%, depending on engine displacement.
This tax increase is raising many concerns, especially from National Assembly deputies and experts. Deputy Duong Minh Anh from the Hanoi delegation pointed out that pickup trucks account for only about 5% of the domestic auto market share and mainly serve the practical needs of people, especially in rural and mountainous areas where terrain is difficult to navigate.
Pickup trucks are specially designed with a cargo bed in the rear, while the two-row cabin in the front, although capable of carrying passengers, is not as optimized as conventional passenger cars. It is this “both passenger and cargo carrying” nature that makes pickup trucks an ideal vehicle for many purposes, from agricultural production, small businesses to disaster relief.
Pickup truck serving various purposes from cargo transport to navigating difficult terrains, subject to proposed special consumption tax increase.
Statistics show that up to 70% of pickup truck consumption is in localities and mountainous provinces of the North, while major cities like Hanoi and Ho Chi Minh City account for only 30% of the market share. This clearly demonstrates the important role of pickup trucks in the socio-economic life of rural and mountainous areas.
Negative Impacts on the Market and Consumers
The increase in SCT on pickup trucks is predicted to have many negative impacts on the auto market and consumers.
Increased vehicle prices, reduced purchasing power: Increased taxes mean that pickup truck prices will increase significantly. This will certainly directly affect the accessibility of vehicles for consumers, especially customers in rural and mountainous areas, who have lower incomes and are heavily dependent on pickup trucks for work and daily life. Reduced purchasing power will lead to a decrease in sales volume, causing difficulties for manufacturers and dealers.
Impact on production and employment: When sales volume decreases, domestic automobile manufacturing and assembly plants are at risk of having to cut production, and even scale down operations. This will lead to the consequence that thousands of direct and indirect workers in the automotive industry may lose their jobs.
Loss of competitive advantage compared to ASEAN countries: Comparing with countries in the ASEAN region such as Laos, Thailand, and Indonesia, pickup trucks are very popular and widely used, even civil servants use them for various purposes. The SCT rate for pickup trucks in these countries is usually very low, and Vietnam is currently at the highest level in the region. Further tax increases will reduce the competitiveness of domestically produced pickup trucks compared to imported vehicles, which goes against the policy of encouraging domestic automobile production and assembly.
Inconsistent with the direction of automobile industry development: The strategy for developing Vietnam’s automobile industry to 2025, with a vision to 2035, has clearly identified prioritizing the development of small trucks to serve agricultural and rural production. Pickup trucks, with their suitable technical characteristics and functions, fully meet this criteria. The increase in SCT, therefore, goes against the development direction of the industry.
Need for Careful Consideration and Appropriate Roadmap
Faced with potential negative impacts, many National Assembly deputies and experts have spoken out, requesting that authorities carefully consider increasing the SCT on pickup trucks.
Deputy Nguyen Thi Viet Nga from the Hai Duong delegation emphasized that urban traffic regulation falls under the authority of the transport sector, and increasing taxes to limit the use of pickup trucks in major cities is unfair to the remaining 70% of consumers nationwide.
Echoing this view, Deputy Phan Duc Hieu, from the Thai Binh delegation, proposed maintaining the current SCT rate for pickup trucks. He analyzed that pickup trucks mainly serve production and business activities, especially in rural areas. Increasing taxes on means of production is unreasonable, causing difficulties for businesses and people.
Phan Duc Hieu, representative from Thai Binh delegation, proposing to maintain special consumption tax on pickup trucks to avoid impacting production and business.
Deputy Hieu also expressed concern that sudden changes in tax policy will affect the investment environment, causing anxiety for investors who have trusted in the stability of Vietnam’s policies.
In the event that a tax increase is necessary to increase state budget revenue, deputies proposed that there should be an appropriate adjustment roadmap, avoiding shock increases, causing negative impacts on the market and businesses. A tax increase roadmap of 3-5 years, with an annual increase of 2%-3%, is considered a feasible solution, helping businesses and consumers have time to adapt.
Conclusion
The proposal to increase the special consumption tax on pickup trucks poses a difficult problem for policymakers. On one hand, increasing taxes can help increase state budget revenue. On the other hand, it risks causing negative impacts on the auto market, production, employment, and especially the rights of consumers, particularly in rural and mountainous areas.
In the context of a still challenging economy, careful consideration and an appropriate tax adjustment roadmap are extremely important. The ultimate goal is to ensure a harmonious balance of interests between the state, businesses, and people, creating conditions for the sustainable development of the automobile market, contributing positively to the socio-economic development of the country.
