Currently, both the cities are applying the same minimum tax level of 10%. The levels have been applied until the cities can calculate the fee tax rates suitable for them, which, according to the current laws, need to be between 10% and 15%.

The MOF said that in order to restrain individual means of transport, Hanoi and HCM City authorities need to increase the vehicle ownership registration tax to 15% for the vehicles with less than 10 seats. The fee level proves to be three times higher than the 5% level applied previously, before the Decree No. 80 dated July 29, 2008, stipulating the ownership registration tax became effective.

Besides the vehicle registration fee, the ministry has also suggested other kinds of fees and charges to be applied for cars and motorbikes. The ministry does not agree with the HCM City’s proposal to raise the registration fee by two folds, from between VND 500,000 to VND 2 million per vehicle to VND 1 million to VND 4 million per vehicle.

The ministry also said that if the proposed fee increases are approved, the high registration fees in some localities will lead to the fact that people have their vehicles registered in neighbouring localities and then bring the vehicles in to the cities to use. As such, this will not help restrain the number of vehicles in circulation and help ease traffic jams.

Regarding the annual vehicle circulation fee, the MOF said that if localities want to use that kind of fee as a measure to ease traffic jams, the localities need to build on the plan to amend the Government’s decree, adding the vehicle circulation fee into the list of fees vehicle owners have to pay. The currently applied decree does not name that kind of fee.

However, the ministry has also pointed out the side effects of this kind of fee implementation. If that kind of fee is only applied for Hanoi and HCM City, a problem will arise as to how to deal with the vehicles coming from other provinces, which are now circulating in the cities.

The second question is that will that kind of fee be collected per every travel or collected annually? If collecting per travel, this may be unfeasible as this will cause jams at fee collection stations. If collecting annually, localities will have to check the fee collection of vehicle owners.

The ministry said that it still needs some more time to consider the circulation fee collection after the learning experiences from other countries