The government’s proposed special consumption tax is high, unreasonable and in breach of some of the country’s World Trade Organization (WTO) commitments, businesses and economic experts said at a conference Thursday.

The new tax regime, unveiled by the Finance Ministry last month, includes taxes on more products and services as well as increases in various tax rates.

The ministry said the amendments were needed to align the 1999 Special Consumption Tax Law with the current social and economic situation as well as the requirements of the WTO. Vietnam became a member of the WTO last year.

However, business representatives said the proposed new tax regime would be a burden for consumers.

Nguyen Qui Thang, first deputy general director of Hoa Viet Joint Venture Corporation, said the 15 percent special consumption tax rate levied on golf courses could deter international players and tourists.

He said Japan, Singapore and Cambodia only collected value added tax of less than 5 percent from golfers.

The tax on under-24 seat cars, which, depending on type, could be raised to 50, 60 and 70 percent from the current 30 percent, also faced strong objections from local car manufacturers.

Pham Anh Tuan, Toyota’s Corporate Planning Department manager, said the steep increase would make car prices in Vietnam the world’s highest. The costliness could also hamper the development of the car manufacturing industry.

“It would be hard to increase the local content in our products as planned,” Tuan said, referring to domestic-sourced materials and parts. Toyota Vietnam’s Innova minivan model has the highest ratio of local content at 37 percent, he said.

Mercedes-Benz Vietnam Deputy Director Nguyen Chi Cong said the country’s automobile industry had only 10 years to prepare for the market to open to automobiles made by member countries of the Association of the South East Asian Nations (ASEAN) in accordance with a regional free trade deal.

The tax, therefore, should be more reasonable as cars would soon no longer be a luxury in Vietnam, he said. Vu Ngoc Anh from the Ho Chi

Minh City Institute for Economic Research said the planned 20 percent luxury tax on motorbikes with engine capacities of more than 175 cubic centimeters would only apply to foreign makes.

No producers in Vietnam invest in manufacturing high engine capacity motorbikes, he said. The tax, therefore, may conflict with the WTO requirement of equal treatment for all members’ businesses.

The proposed special consumption tax will be applied to services, including karaoke, discos, casinos and lotteries, and to commodities like tobacco and alcohol.

Phan Thi Viet Thu, a lawyer in HCMC, said the tax would harm many blind people who worked in the massage industry.

Thu suggested the government treat therapeutic massage services differently to “relaxation” services, which could be levied with the 40 percent special consumption tariff.

The unicameral National Assembly is expected to consider and vote on the new tax regime at its November meeting. If passed, the law will take effect next August with amendments to alcohol tax to be applied in 2010.