Modernizing revenue forecasting

In recent times, information on monthly and annual state budget revenues has always been a positive signal for the economy. Experts have assessed that state budget revenue forecasting has harmoniously combined traditional and modern methods, and modified the process, thereby achieving higher accuracy.

Forecast close to reality

Mr. Mai Xuan Thanh, Director General of the General Department of Taxation, said that revenue forecasting is not only an important tool in managing the State budget, but also a core factor in improving the quality of State budget management. Accurate revenue forecasting helps the Government develop appropriate financial plans, thereby allocating resources reasonably for all activities of the country, avoiding budget deficits or wasting resources. On the contrary, inaccurate forecasts can lead to budget imbalances, affecting the implementation of socio-economic development tasks and long-term national goals. In addition, revenue forecasting is also used in the policy-making process, including assessing the impact before, during and after the issuance of policies. At the same time, revenue forecasting tools are also used as a measure to help assess the quality of revenue management and identify tax gaps for a number of taxes.

To improve the accuracy of state budget revenue forecasting, there needs to be close coordination between agencies and units in providing information on macroeconomics and financial and monetary policies and other information and data. Accordingly, the Ministry of Finance has coordinated with relevant agencies and units to establish a Macroeconomic Forecasting and Revenue Forecasting Working Group, consisting of 25 members from 11 agencies and units under the Ministry of Planning and Investment. The Working Group is responsible for organizing and implementing state budget revenue forecasting, including providing and building necessary databases, coordinating with experts to research, develop and operate macroeconomic forecasting and revenue forecasting models. The goal is to make realistic forecasts, and at the same time develop guidance documents from the database building stage to the building, operation and application of revenue forecasting models, Mr. Mai Xuan Thanh informed.

However, the gap between the budget and actual revenue for some revenue items is still quite large, especially for those that are strongly affected by unusual factors. Ms. Pham Thi Tuyet Lan, Director of the Tax Revenue Estimate Department (General Department of Taxation) shared that since the outbreak of Covid-19, especially in 2021 and 2022, the economy has fluctuated greatly, many uncertain factors are beyond the forecast of domestic and international organizations, inflation has broken out globally, investment capital flows have shifted strongly between countries, completely changing the economic growth rate compared to the target when building the budget.

Modernizing revenue forecasting to promote efficiency in state budget management

In addition, it is very difficult to accurately forecast revenue from crude oil because prices not only depend on supply and demand in the market, but are also greatly influenced by the world political situation, especially in countries with large oil reserves. Another example is that the average growth rate of land use fees over periods and years is uneven, with some areas showing irregular, unstable and difficult-to-forecast developments, concentrated in localities with advantages in industrial development, logistics, economy, tourism, etc. In addition, the land use fee revenue estimate is built from the ground up with the participation of many levels and sectors in forecasting, but is not yet tight and timely, affecting the quality of forecasting land-related revenues, Ms. Pham Thi Tuyet Lan said.

Simplify processes, increase technology application

To improve the quality of forecasting and budgeting close to actual occurrences, the General Department of Taxation believes that it is necessary to promote the decentralization of revenue sources associated with the decentralization of revenue management, eliminating the interlocking. Strengthening the responsibility and authority of authorities at all levels, institutionalizing the responsibility in providing information, coordinating forecasting and budgeting between agencies, departments, branches and revenue agencies need to be specified and individualized close to reality.

In addition, it is necessary to simplify the process of forecasting and making budget estimates based on the construction and completion of application software to automate data collection, apply software to integrate information outside the tax sector to serve the analysis, forecasting and making estimates. Promoting the application of information technology in collecting and processing information, restructuring the time for each stage appropriately, ensuring that 20% of the time is spent on collecting and processing information, and 80% of the time is spent on analysis, evaluation and forecasting is extremely necessary.

To improve forecasting accuracy, experts recommend using advanced forecasting models such as regression, cross-sector balance sheets, and big data analytics to process increasingly complex information. Experience from Germany and other European countries shows that using these tools can significantly improve forecasting accuracy, reducing errors to less than 5%. The government should also consider simplifying the budgeting process by reducing the number of levels involved and using digital technology.

At the same time, it is necessary to prioritize the construction of a national data warehouse on budget revenue, integrating from the central to local levels to help standardize information and improve forecasting efficiency. This is an important step to ensure transparency and the ability to respond quickly to economic fluctuations. Above all, it is necessary to develop human resources through in-depth training for officials working on revenue forecasting, which is a key factor. Vietnam should organize cooperative courses with international experts and develop long-term training programs, including sending officials abroad to learn practical experience.

Whatever the solution, according to Ms. Pham Thi Tuyet Lan, the construction of the State budget estimate must cover revenue sources, ensure positivity, and be close to actual occurrence; must correctly and fully calculate each revenue item, tax, and revenue sector for each locality according to the law on tax, tax management, and State budget management.

Source: https://thoibaonganhang.vn/hien-dai-hoa-cong-tac-du-bao-thu-ngan-sach-159128.html