"All expenses of my mother and I depend on our salary. We have to save every penny but every month we are always short, so even though the amount of tax we have to pay is not much, I still feel regretful," said Ms. Lan, an office worker in Dong Da district, Hanoi.
Ms. Lan divorced a year ago and is raising her child alone. She was paid a salary of 18 million VND. After deducting insurance and taxes, she received more than 17 million VND, which was not enough for the family's fixed expenses. But this amount continued to be "scraped" with an additional 100,000 VND in income tax after "family deductions".
Ms. Lan's biggest wish is for the family deduction to increase to the equivalent of the minimum expenditure for children, about 7 million VND.
Despite having an income many times higher than Ngoc Lan, Duc Tuan, a 31-year-old IT engineer in Ho Chi Minh City, still finds life difficult because the cost of raising children and living expenses for his family is many times higher than the deduction. "Few people can live on 11 million VND in this city, not to mention the deduction of 4.4 million VND for dependents is so low that it is like not having it," the young father said.
Tuan’s wife works for a quality control company, while he works in IT for an FDI company. Every year he has to pay more than 60 million VND in personal income tax (PIT), not counting when he has unusual income.
Two months ago, Tuan and his wife welcomed their first child. Since then, the family's expenses have doubled, and the pressure has increased.
Family deduction is an amount deducted from an individual's income before calculating tax to ensure the minimum necessary expenses for the taxpayer himself and those with the obligation to support him.
Over the 16 years since its promulgation, the family deduction has been adjusted three times. Currently, taxpayers are entitled to a deduction of VND11 million/month and VND4.4 million/month for each dependent.
But people's spending has increased many times faster than the increase in family deductions. While the minimum spending per person has increased 4-5 times compared to 2008, the minimum wage has increased 6-7 times, and the family deduction has increased less than 3 times.
In November 2024, responding to the proposal of the Ho Chi Minh City National Assembly delegation on "the need to increase the family deduction level in accordance with the current socio-economic situation", the Ministry of Finance said "it is still not possible to adjust when the CPI fluctuates less than 20% compared to the most recent change".
"The current family deduction level is unreasonable," said lawyer Nguyen Danh Hue, Hanoi Bar Association.
He first analyzed that the deduction level does not reflect the actual cost of living. Inflation increased sharply after the Covid-19 pandemic, pushing up the cost of living in big cities like Hanoi and Ho Chi Minh City significantly. For example, in 2020, an office lunch cost about 30,000 - 40,000 VND, now it is 50,000 - 70,000 VND. The prices of gasoline, electricity, water, especially for lodging have increased sharply, but the deduction level remains at 11 million VND, not enough to ensure a minimum standard of living in big cities.
The deduction for dependents of VND4.4 million is also "very far from reality", according to lawyer Hue. The cost of studying for a primary school student in public schools in Hanoi and Ho Chi Minh City ranges from VND3-7 million, while private schools can cost up to VND10-15 million per month. An elderly person who needs care at home or in a nursing home also costs at least VND8-10 million per month.
Another drawback is that the family allowance policy does not adjust to annual price fluctuations. Meanwhile, many countries apply an automatic adjustment mechanism according to the inflation rate, helping to ensure tax fairness. This not only affects individuals and families, but also negatively impacts the purchasing power of the market, thereby affecting the overall economy.
According to the General Department of Taxation, personal income tax revenue in 2024 will reach VND189,000 billion, exceeding the annual estimate by about VND30,000 billion . The number of personal income tax payers has been increasing steadily over the years, currently about 26 million people.
"High personal income tax revenue is also a manifestation of the increasing tax burden, workers are suffering many disadvantages," said Dr. Nguyen Ngoc Tu, former Director of the General Department of Taxation.
This is reflected in the stories of Ms. Lan and Mr. Tuan. The goal of personal income tax is to tax people with higher than average incomes, people with low incomes will not have to pay. Even if the tax rate is only a few tens to a few hundred thousand, it is still "unfair to low-income people". "The personal income tax law is outdated, in which the most outdated thing is the family deduction, which requires immediate amendment", Mr. Tu said.
The Ministry of Finance is seeking opinions on amending the Personal Income Tax Law, which is expected to be submitted to the National Assembly at the end of 2025, approved in 2026 and implemented in 2027. Mr. Tu suggested that the family deduction level could be revised immediately and implemented this year because the procedure is simple and there is no need to amend the law. This will help reduce taxes, increase income, boost purchasing power and contribute to the GDP growth target of 8% in 2025.
VN (according to VnExpress)Source: https://baohaiduong.vn/kien-nghi-sua-ngay-muc-giam-tru-gia-canh-trong-nam-2025-406310.html
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