According to a report by the NA Standing Committee presented by chairman of the NA's Financial and Budgetary Committee Phung Quoc Hien, some amendments had been made from the version proposed at the previous 7th NA session.

It stipulated the specific types of product that should be taxed, for example, peat, coal and anthracite instead of coal in general, and who must pay tax for small-scale exploitation.

Under the new draft, consumers would be taxable for certain products while producers and importers would pay mandatory tax on everything.

Hien said the regulation was appropriate since the law was made on the principle that those who used products that caused pollution should pay tax.

He also said the NA Standing Committee had agreed to apply environmental taxes on petrol and oil products.

Hien agreed that only a reasonable tax should be applied on those products since they were already subject to a number of other taxes and fees.

"At the moment, a floor rate of VND1,000 (US$0.05) per litre is appropriate. If it gets any higher, the Government needs to adjust other taxes imposed on petrol and oil products in order to control a price hike," he said.

"On the other hand, petrol and oil prices are related to the world market. To ensure flexibility in management, the floor and ceiling rates should remain within reasonable perimeters in the draft law (VND1,000-VND4,000 per litre)."

With regards to the method of calculating the tax, the NA Standing Committee suggested using the absolute tax rate since the issuance of the law aimed to change consumer behaviour and enhance public awareness of environmental issues, rather than fill State coffers.

Most of the deputies agreed with the report, saying that the law's ultimate aim was to protect the environment and restrict the use of products that caused pollution.

Some deputies proposed to change the name of "soft plastic bags" to "nylon bags", which they said was easier to understand.

Deputy Tran Van Tan from southern Tien Giang Province suggested they introduce a tax on nylon bags given they pollute the environment for hundreds of years.

Deputy Nguyen Lan Dung from Central Highland Dak Lak Province said measures had already been taken to limit the use of plastic bags but a tax wouldn't be feasible since there was no replacement and even developed countries were still tackling the problem.

Dung also proposed to impose a tax on vegetable growers if their products were found to contain pesticides.

Deputies Thai Thi An Chung from central Nghe An Province and Nguyen Thi Bach Mai from southern Tay Ninh Province both suggested an environmental tax on tobacco, saying it was harmful to both humans and the environment, with minimal control over its use.

But according to the NA Standing Committee, a law to prevent and control the damage of tobacco was being drafted with measures to deal with behaviour that causes pollution through smoking.

Moreover, tobacco is already subject to a high rate of special consumption tax and is not subject to environmental tax in other countries.

Insurance business

Yesterday afternoon, lawmakers also discussed proposals to amend and revise some articles of the Law on Insurance Business, which came into effect in April 2001.

The amendments were designed to fit with Viet Nam's commitments to World Trade Organisation regulations and spur the stable development of the insurance market.

Concerning cross-border insurance, deputies Nguyen Thi Nguyet Huong and Nguyen Dinh Quyen said it needed specific regulations.

They explained this activity was related to the transfer of foreign currencies to other countries via insurance premiums and a flow of foreign cash into Viet Nam.

Controlling the industry would help limit the loss of foreign currency and taxes.

Most of the deputies agreed to a regulation on compulsory reinsurance, which they said helped share risks and ensured the safety of enterprises.

The regulation would require insurance businesses to contribute a larger portion of their retention to the Viet Nam National Reinsurance Company.

With regards to licensing, deputy Dang Van Khanh consented to a rule that compelled individuals and organisations to have adequate financial capacity and proof of legal financial sources before engaging in the insurance business. — VNS