The Air-Conditioning Luxury Tax: A Step Back in Time for Consumers

In case organizations or individuals produce or import separate parts, either the condenser or the evaporator, the goods sold or imported (condenser or evaporator) are still subject to special consumption tax as complete products (complete air conditioners) to legalize the stable regulation for a long time. The tax rate applied to air conditioners is 10%.

The imposition of a special consumption tax on air conditioners has received great attention from National Assembly deputies during their group discussions on the same morning. Delegate Truong Trong Nghia (Ho Chi Minh City delegation) questioned whether air conditioners are currently considered luxury items.

According to Delegate Nghia, many families now use air conditioners, and taxing this item means “pushing back the lifestyle of Vietnamese people by 40-50 years.”

“Many people live in rented rooms, and when it’s hot, they install air conditioners for their families and children,” he said. “Moreover, they don’t always use air conditioning; it depends on the timing, so including it in the category of items subject to special consumption tax is unreasonable.”

The deputy of Ho Chi Minh City also pointed out that the special consumption tax is an indirect tax levied on certain types of goods and services considered luxurious to regulate their production, import, and social consumption. It also significantly adjusts the income of consumers.

“With a tropical climate like Vietnam’s, I don’t understand the rationale for including air conditioners in the category of items subject to special consumption tax,” he said. “I propose that the drafting body reconsider and exclude this item from the taxable category.”

Meanwhile, Delegate Nguyen Minh Hoang, Chairman of the Ho Chi Minh City Association of Former Prisoners of War, suggested that with the current socio-economic development, many families can afford air conditioners. Additionally, using air conditioning is a way to improve and enhance the quality of life. Therefore, he proposed excluding air conditioners from the list of items subject to special consumption tax.

Delegate Nguyen Quang Huan (Binh Duong province) acknowledged that using air conditioners contributes to environmental pollution. Still, as people’s living standards improve, air conditioning becomes an essential need.

“Can we endure the summer heat, especially in the city, without air conditioning?” he asked. “As the demand for air conditioning increases, should it be subject to special consumption tax?”

Regarding the draft law, Mr. Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, said that some opinions suggested reconsidering the imposition of a special consumption tax on air conditioners because their use has become prevalent and they are no longer considered luxury items as before.

Therefore, if the special consumption tax is still levied on air conditioners, it should only be applied to those using refrigerants containing HCFC (a compound containing carbon, hydrogen, chlor, and flour) to encourage the use of environmentally friendly technology or classify them according to design capacity and exclude popular types that meet the essential needs of the people from taxation.