People "lose both ways"
On July 29, the General Statistics Office announced data showing that: The Consumer Price Index (CPI) in July 2024 increased by 0.48% compared to the previous month. Compared to December 2023, the CPI in July increased by 1.89% and compared to the same period last year increased by 4.36%. On average, in the first 7 months of 2024, the CPI increased by 4.12% compared to the same period last year; core inflation increased by 2.73%. According to the General Statistics Office, the reason is that "in the past month, domestic gasoline prices increased following world prices, the demand for household electricity increased and the health insurance premium was adjusted according to the new basic salary".
Thus, it can be seen that just 1 month after the basic salary increased by 30%, the CPI has "increased" with the salary. That raises more issues about the need to quickly amend the Personal Income Tax Law when the Law is too outdated, causing disadvantages for the people.
In fact, right before the time to prepare for the increase in the basic salary from July 1, Ms. Nguyen Thi Thuy - Vice Chairwoman of the National Assembly's Judicial Committee warned: Personal income tax is too outdated, having to wait until 2026 to amend the law will cause disadvantages for the people. Accordingly, the Personal Income Tax Law stipulates the family deduction for taxpayers at 11 million VND/month, with each dependent at 4.4 million/month. The deduction for dependents at 4.4 million/month is really no longer suitable for the current situation, especially in big cities, causing losses for taxpayers.
Deputy Nguyen Hoang Bao Tran (Binh Duong Delegation) also reflected that the current increase and reduction in family circumstances for personal income tax payers is no longer consistent with the rising inflation index and the difficult economic situation. In particular, according to Deputy Tran Hoang Ngan (Ho Chi Minh City Delegation), businesses are currently facing many difficulties. Therefore, there needs to be more breakthrough solutions, especially tax and fee reductions to support businesses and people, because the number of businesses currently withdrawing from the market is very large.
Associate Professor Dr. Dinh Trong Thinh (Academy of Finance) expressed his opinion that the delay in amending the Personal Income Tax Law will cause people to "lose many things". Because the basic salary increases by 30% from July 1, the income of officials, civil servants and public employees will increase accordingly and they will become taxpayers while their income depends only on... salary. "Many things are outdated. That is not good, it needs to be fixed as soon as possible" - Mr. Thinh said, and cited: Leaving it like that will cause great damage to people, and affect people's trust because taxes must be fair, neutral, and have an impact on regulating income. Now, 11 million VND to live in Hanoi and Ho Chi Minh City is not enough to live while having to pay taxes. That is unreasonable.
According to the provisions of the Personal Income Tax Law, when the consumer price index (CPI) fluctuates above 20%, the Government submits to the National Assembly Standing Committee an adjustment to the family deduction level. However, according to Mr. Thinh, "the proposed amendment of the regulation above 20% is outdated". Because inflation is different every year, 5% this year is different from 5% next year because inflation is calculated on the total price of the economy. For example, the total value of the economy this year is 40 billion USD, next year is 41 billion USD, the two denominators are different.
“Inflation erodes people’s income. The goal of tax is to hit people with above-average income and high income. When GDP increases and per capita income increases, living standards and spending increase. So taxes must also be raised according to general spending. That means they must be calculated according to living standards. Taxes are imposed so that taxpayers find it reasonable, valid, and accept paying taxes, not so that they calculate and avoid evasion,” said Mr. Thinh.
Need to fix “as soon as possible”
Giving her analysis, Ms. Nguyen Thi Thuy said that if the salary increases but the family deduction level is not adjusted in a timely manner, it will cause anxiety for workers. Because when the salary increases, taxable income will increase. Failure to adjust in a timely manner will directly affect the meaning of the salary reform policy. Therefore, it is recommended that the Government submit to the National Assembly an amendment to the Personal Income Tax Law in October this year for approval at the May 2025 session.
According to Minister of Finance Ho Duc Phoc, personal income tax collection began in 2009. By 2020, the National Assembly issued Resolution 954 stipulating the family deduction for taxpayers at 11 million VND/month and each dependent at 4.4 million VND/month. According to current regulations, taxpayers with one dependent with an income of about 17 million or more are subject to personal income tax. If there are 2 dependents, the income must be over 22 million to be subject to tax.
Minister Ho Duc Phoc informed: Currently, the National Assembly Standing Committee has added a program to develop laws and ordinances to amend the Law on Personal Income Tax at the October 2025 Session, and to pass it at the May 2026 Session. If the National Assembly Standing Committee decides to do it this year to pass it in May 2026, the Ministry of Finance will comply, seek opinions from National Assembly deputies and the people to issue appropriate regulations.
Agreeing with the need to speed up the revision of the Personal Income Tax Law, economist Can Van Luc said that the revision of the Personal Income Tax Law has been included in the 2025 roadmap by the Ministry of Finance. Therefore, to speed up the progress, the Government and the Ministry of Finance must prepare, but it is important that the Law must ensure quality. "The spirit is to revise the Law as soon as possible, but must ensure the quality of the Law and comply with the procedures and regulations required by the National Assembly," Mr. Luc said.
Dr. Cao Sy Kiem - former Governor of the State Bank of Vietnam, said that the Personal Income Tax Law aims to redistribute each person's income, and each person's responsibility to contribute to society, creating revenue for the budget. This proves that the economy is developing, because when the economy develops and income is high, everyone must pay taxes.
“If salaries increase while the taxable level does not increase, more people will have to pay taxes. The motivation to increase salaries is to improve people's lives. If salaries are taxed and their lives are reduced, then the salary increase is meaningless,” said Mr. Kiem, and he believed that adjusting taxable income levels must also increase to ensure fairness. At the same time, it is necessary to create motivation to stimulate all people to fulfill their obligations to contribute to the country, while contributing to promoting economic development. Therefore, amending the Personal Income Law is legitimate and should be done as soon as possible. If it is left undone, it will lose motivation and reduce people's trust. Policy makers and people must fully understand and join hands to contribute to the sustainable development of the economy and have motivation right in its development.
Meanwhile, in response to the fact that the current salary and family deduction levels for calculating personal income tax are outdated, but the National Assembly has not yet included this content when adjusting the Law and Ordinance Development Program in 2024, Ms. Nguyen Phuong Thuy - Deputy Head of the National Assembly's Law Committee said that to include it in the National Assembly's Law Adjustment Program, strict requirements must be followed. "When the Ministry of Finance prepares and advises the Government, and includes the dossier in the Law Development Program, the National Assembly Standing Committee will consider it and may include it in the nearest possible session. This is indeed very urgent, but it must comply with the prescribed procedures," Ms. Thuy said.
Personal income tax is too outdated
According to Ms. Nguyen Thi Thuy - Vice Chairwoman of the National Assembly's Judicial Committee, personal income tax is too outdated, waiting to amend the law will cause disadvantages for people. "The current family deduction level does not really reflect the basic spending of families and individuals nor does it reflect the current real living standards. If we have to wait another 2 years to pass the amendment of the Personal Income Tax Law as proposed, there will be many people who have "tightened their belts" but still have to pay personal income tax" - Ms. Thuy emphasized.
Amending the Personal Income Tax Law is the desire of many voters.
Mr. Tran Van Lam - Standing Member of the National Assembly's Finance and Budget Committee - the agency that will review the Personal Income Law project, said: Amending the Personal Income Tax Law is the desire of many voters and many National Assembly deputies have expressed their opinions.
“This issue depends on the preparation work of the Government and the Ministry of Finance. Currently, many tax laws are in the process of being researched and revised. The roadmap has been set out. If we want to speed up the revision of the Law, the problem lies in whether the conditions for the revision are met or not. Because we have to summarize and evaluate the results of the implementation of the Law, survey, and consult for opinions,” said Mr. Lam.
According to Mr. Lam, the Personal Income Tax Law has many problems. When talking about the reasonableness of the policy when wages increase, inflation increases, and the currency depreciates, it must be considered and adjusted appropriately. Because increasing wages must truly improve the lives of salaried workers.
Source: https://daidoanket.vn/dung-de-vua-tang-luong-lai-phai-ganh-thue-10286789.html
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