February 12, 2009

The Vietnam Ministry of Finance (NOF) has challenged the Ministry of Agriculture and Rural Development's (MARD) resolution on increasing taxes for milk material imports, stating that the taxes could be a "wrong decision."

Vu Van Truong, Director of the Tax Policy Department under MOF, said that "this is not the first time that MOF has received a proposal on raising the taxes on milk materials". MOF, he says, monitors operations of industries that needs adjustment to taxes to support enterprises. However, tax increases on milk material imports need more consideration.

MARD has officially asked for milk import tax increases in order to help farmers sell milk domestically. However, Truong said that "farmers have been having difficulties selling milk not because of the low tax, but because of the melamine scandal". Recently, he said dairy producers could not sell products because due to consumers' fears that milk products contain melamine. Milk producers have also reduced their volume purchase from farmers.

Therefore, in this case, import tax increases would be the wrong prescription. We need to analyse the situation and find out the main reasons for farmers' slow milk sales. If you give the wrong medicine, the patient will not get better.

MARD's tax increase proposal would need serious consultations with other ministries and branches, including the Ministry of Industry and Trade, which is managing production and local consumption, and consumer rights protection associations, he said.