The Ministry of Finance said, in addition to regular expenses, the State Budget is also used for socioeconomic infrastructure construction and works unable to recover capital. This spending is primarily sourced from loans and government bonds; hence, the high spending demand is obvious. In recent years, the State budget deficit is basically maintained at 5 percent of GDP. In 2013, the initial budget deficit was estimated at 4.8 percent of GDP. However, due to declining revenue, the Government asked the National Assembly for adjusting the budget deficit to 5.3 percent of GDP. The real figure was forecast to be lower, however. In 2014, the National Assembly decided to set the budget deficit at 5.3 percent of GDP. While implementing, the Government will strive to increase revenues and cut costs, thereby reducing the magnitude of deficit.
The ministry attributed higher than estimated deficit to economic slowdown. To ease difficulties in production and business activities and support the market, State budget revenue was adjusted down. Specifically, universal corporate income tax was lowered from 28 percent to 25 percent from January 1, 2009 and to 22 percent from January 1, 2014. Small and medium businesses were particularly imposed the corporate income tax of 20 percent from July 1, 2013. The reduction in revenue was also resulted from the adjustment in personal income tax. The taxable income was raised from VND4 million per month to VND9 million and the discount for each dependant was increased from VND1.6 million a month to VND3.6 million. As a result, the number of taxpayers was forecast to be reduced from 4 million people to 1 million people.
In addition, the country also exempted or reduced farming land tax, exempted irrigation charges; reviewed, slashed and removed hundreds of fees and charges. In three straight years from 2011 to 2013, the State exempted, reduced taxes and rescheduled payment terms for companies and stimulate consumer demand (VND10,100 billion in 2011, VND13,300 billion in 2012, and VND16,600 billion in 2013). With the above exemption and reduction measures, tax and fee revenue equalled 22.7 percent of GDP in 2011, 20.6 percent in 2012, 18.4 percent in 2013 and 17.2 percent in 2014 (The objective for the 2011-2015 period was 22-23 percent of GDP).
In the current context, to improve State budget deficit and reduce repayment burdens in the future, the Ministry of Finance said the Government will direct ministries and agencies to carry out measures to raise prospective tax revenue like perfecting laws and policies on State budget revenue in the spirit of encouraging investment, restructuring production and business activities of enterprises, reshuffling State-owned enterprises to boost their operating efficiency to increase tax payments. Besides, the government will continue to improve the efficiency of public investment, allocating investment capital for key projects, and speeding up investment socialisation by expanding BOT, PPP investment forms.
The Government will exercise thrift and fight against wastefulness; review and assess policies and laws in force to modify and remove unnecessary and overlapping ones; review economic and technical norms systems to set better budget targets.
To fulfil budget targets in 2014, the Ministry of Finance proposed two groups of solutions to increase revenue and reduce expenses to ease budget deficit. Firstly, the ministry will assist enterprises to deal with difficulties, restore growth and expand operations, thus enabling them to pay more taxes. The ministry will closely combine fiscal and monetary policies.
The ministry will continue reforming and simplifying administrative procedures, especially tax and customs procedures, to shorten the time needed to complete clearance procedures; expand electronic tax declaration, tax payment through banks, automate the process of receiving tax and customs procedures. The ministry strives to reduce compliance costs in tax and customs procedures for individuals, organisations and businesses. From April 1, 2014, the automated VNACCS system officially went into operation, thus reducing much of clearance time for enterprises.
Then, the ministry will slash public investment and review public investment projects to make proper adjustments and avoid wastefulness. Thus, in 2014 and beyond, the Ministry of Finance will place priority to budget management in flexible, coherent and effective manner to achieve the budget revenue target set by the National Assembly.
Le Hien
Vietnamese
