Tax collection bonus up for debate

March 15, 2016 | 06:00 am PT
The National Assembly Budget and Finance Committee says the government should reconsider a proposal to reward municipal governments for effective tax collection given the VND256 trillion ($11.52 billion) deficit Vietnam ran last year.

The government has planned for the first time to reward provinces and cities for collecting more taxes than expected, according to a report on the state budget presented by the government at a meeting on Monday.

The government plans to allocate VND1.73 trillion from the state budget to award to the municipal governments that are the most effective tax collectors, according to the report released at the meeting.


(Photo: VnEpress) 

The local governments nominated helped bring an extra VND76.4 trillion into state coffers, however this was still VND2.26 trillion short of projections, according to the report.

The majority of members of the commission said the government should reconsider the proposal given the VND256 trillion budget deficit Vietnam ran last year, said Phung Quoc Hien, chairman of the Finance and Budget Commission.

However, the commission acknowledged the rewards are in accordance with the Law on State Budget.

Tax collection reached over VND806.37 trillion in 2015, up 17.7 percent year on year, according to figures from the General Tax Department.

Tax departments nationwide also collected extra sums last year including nearly VND40 trillion in tax debt, and VND14.3 trillion in dividends from state-owned commercial banks in which the state held controlling stakes.

Rising deficit

As reported by the government, in 2015 the budget deficit was at VND256 trillion, accounting for 6.11 percent of GDP. This was a 14.3 percent year-on-year rise from the VND224 trillion deficit in 2014.  

Deputy Prime Minister Vu Van Ninh, speaking to the Vietnam News Agency last month, stressed the jump was partly due to increasing recurrent spending, mostly for running government offices, state employees and other related expenses, which amounted to almost 70 percent of all spending. 

The state budget deficit has been rising steadily, and was at 5.36 percent of GDP in 2012, 6.6 percent in 2013 and 5.69 percent in 2014.

The National Assembly set a ceiling on the budget deficit for 2015 of 4.5 percent, including government bonds.

Total public debt by the end of 2015 was at 62.2 percent of GDP, while government debt was at 50.3 percent and foreign debt was just over 43 percent.

Vietnam's GDP  rose 6.68 percent in 2015 over the previous year to $186.2 billion, around 0.3 percent of GDP generated globally in 2014.

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