Overlapping storms

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SaigonTimes English - 26 month(s) ago 4 readings

Mainstreamed on local media these days are the Ministry of Finance’s draft on revising the Personal Income Tax Law and the Ministry of Transport’s scheme to slap multiple fees on personal vehicles, motorcycles and automobiles alike. These two seemingly-different issues capture equally-strong attention from the public at a time when the economy in general and poor people’s incomes in particular are in the storm’s eye of inflation. There is no shelter to take if the two schemes likened to overlapping storms are to proceed as planned.

Overlapping storms

By Son Nguyen in HCMC

Mainstreamed on local media these days are the Ministry of Finance’s draft on revising the Personal Income Tax Law and the Ministry of Transport’s scheme to slap multiple fees on personal vehicles, motorcycles and automobiles alike. These two seemingly-different issues capture equally-strong attention from the public at a time when the economy in general and poor people’s incomes in particular are in the storm’s eye of inflation. There is no shelter to take if the two schemes likened to overlapping storms are to proceed as planned.

The common thread in the two schemes is that the two ministries are probably seeking to augment State coffers regardless of the mounting pressure exerted on the people’s shrinking wallets. With the draft on revising the Personal Income Tax Law, the Finance Ministry seeks to raise the taxable threshold to VND6 million a month while the deduction for the taxpayer’s dependent is to be raised to VND2.4 million, both increasing by 50% from the current levels. With the scheme on imposing fees, the Transport Ministry is determined to collect the most from vehicle users, despite huge financial burdens already shouldered by the society in this regard.

The draft tax law, as suggested by the Finance Ministry, should take effect from early 2014, and changes introduced therein are aimed for the State to share difficulties with the people, says deputy finance minister Vu Thi Mai in Tuoi Tre. Her explanation instantly backfires, with scores of articles and thousands of readers nationwide criticizing the ministry’s view, saying the ministry has failed to take into account negative changes in the economy.

Since the prevalent law was prepared in 2007 until the end of 2011, the consumer price index had increased by 70%, and supposed that inflation is milder in the next two years, at 10% a year, the CPI should have increased by nearly 100% when the ministry’s draft is passed into law in early 2014, according to Nguoi Lao Dong. However, the tax threshold is to be raised by only 50%, meaning a setback that puts taxpayers at a huge disadvantage.

Nguyen Thai Son, a taxation official with the HCMC Taxation Bureau, is quoted by Nguoi Lao Dong as saying that such a draft has neglected the taxpayer’s right.

Nguyen Mai, former Deputy Minister of Planning and Investment, criticizes in Tuoi Tre that the tax revenue is being maximized. He stresses that revenue for the State budget amounted to 28% of gross domestic products in the 2016-2010 period compared the world’s average of 15-16%, and suggests that the Government lower the proportion to some 20-22% of GDP.

In a full-length article in Tuoi Tre, a teacher says that the proposed taxable threshold is not appropriate for the current time, let alone the year 2014 when prices must have been chased up strongly.

Economist Le Dang Doanh calls for changes to the personal income tax law, taking into account the annual inflation rate as the crucial factor for revising the taxable threshold, according to Nguoi Lao Dong.

In an investigative report, Tuoi Tre relates how four different personal income tax methods have been prepared, but the Finance Ministry with an aim to secure revenue has chosen the one that is the least beneficial to taxpayers.

While the draft personal income tax law will directly affect most income earners in the economy, the Transport Ministry’s scheme to collect fees from owners of vehicles targets smaller groups, but the outcries are louder.

All vehicles in the country have been subject to different fees, which make the cost of owning such transport means much higher than in other developed countries. For instance, a car in Vietnam is three times more expensive than the same vehicle in the U.S. due to preventively high financial obligations, including the import tax of some 82%, the special consumption tax of 50%, and the value-added tax of 10%, let alone the registration fees of 15% to 20% and other fees. That is not to mention the fee collected via fuel, at VND1,000 a liter of gasoline, and the fees collected at toll stations nationwide.

Most lately, at the Transport Ministry’s proposal, the Government has issued a decree forcing all vehicle owners to pay a road maintenance fee, at millions of Vietnam dong a year for an automobile and some VND80,000-150,000 a bike. The ministry has also proposed a new fee initially known as circulation fee, at between VND20 million and VND50 million a car each year. The ministry this week has changed the name of the fee to vehicle ownership restriction fee, while the proposed collection levels stay put.

Such are the overlapping fees on road users, comments Tuoi Tre. Thai Van Chung, general secretary of the HCMC Cargo Transporters Association, gives a list of nine different fees already imposed on vehicle owners, explaining why Vietnam’s transport industry cannot compete with regional players. Lawyer Huynh Van Nong criticizes in the newspaper that such fees will adversely affect social security as poor people will be hit the hardest.

In talks with local media this week, Nguyen Hoang Hiep, vice chair of the National Traffic Safety Committee, asserts that the vehicle restriction fee as well as the road maintenance fee will surely be imposed despite certain objection. Meanwhile, aware of the overlapping storms menacing their livelihoods, up to 99% of 3,000 readers making feedbacks on Dan Tri news website grossly reject the new fee.

The two schemes by the two ministries are different issues, but the common thread between them, says Dan Viet, is that they are out of touch of the real life. If so, authorities should not ever mention that “the State shares difficulties with the people,” and that “the schemes have the people’s consensus.”

The Saigon Times Daily

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