Pham Chi Lan: "I do not agree with the taxation plan proposed by the Ministry of Finance (MoF). Currently, only those with an income of VND5mil and more, have to pay income tax. I think that even the VND5mil threshold is not suitable, because it is quite low given the current conditions".

"Lowering the threshold for income tax to VND3mil/month will limit public purchasing power. Lower income levels caused by higher taxes will discourage investors from business or injecting money in production, thus holding back economic development. With such a taxation policy, people will have no chance to purchasing houses and vehicles, and improve their lives".

Tran Quang Thang: "This move will make the government unpopular with the people if it is approved. Currently, those earning income of VND3-4mil/month enjoy preferential policies for purchasing houses as ‘low income earners’. However, under the new taxation plan, they will be referred to as ‘high income earners’, because they have to pay income tax.

Pham Chi Lan: It would be better if the MoF concentrated on collection of other taxes, including corporate taxes or import taxes, instead of lowering the income tax threshold.

Wrongdoings in tax payment and collection occur everywhere. Enterprises are evading taxes, while tax collectors collude with tax payers to pocket state money.

I think if the State can control its spending; it will be able to ensure the state budget balance, while there will be no need to collect more taxes. The State has been concentrating on tax collection, while not paying appropriate attention to spending control, thus wasting money.

The tendency now popular in the world is lowering the receipts from citizens, while still ensuring government’s expenses by controlling spending and stimulating the national economy.

Tran Quang Thang: Instead of lowering the threshold for PIT, the Government should think of other measures to improve the collection, such as stimulating the real estate market or imposing tax on land assignment.

In order to economise spending, the State should call for more investment from the private sector in big projects. The State should think of collecting more from enterprises (in order to reach that goal, the state should encourage the development of the private sector), rather than trying to collect from poor people.

Do you know the actual reasons for the Ministry of Finance decided to lower the threshold for income tax?

Pham Chi Lan: The MoF argues that income tax should apply on everybody who has taxable income to be fair. However, I think the argument is true only in other countries, which have average incomes higher than in Vietnam. Other countries did not tax low income earners when they were underdeveloped nations. Only when the average income is higher do the countries tax every individual.

Vietnam should expand the income tax only when the average income per capita reaches $1,500-2,000.

Tran Quang Thang: The Minister of Finance has to explain the ministry’s proposed plan so that the people can understand and contribute their opinions.

How will the proposed taxation plan affect the operation of local enterprises?

VND3mil/month is what most low-level business managers earn or those that have just graduated from university. If the State imposes tax on them, they will ask the enterprises to pay a higher salary, which means a heavier burden will be put on the shoulders of their employers. It is clear that with heavier financial burdens, these enterprises will find it more difficult to survive competition when Vietnam joins the WTO and fully integrates into the world.

Dang Vy

Source: VietnamNet