The family deduction for taxpayers is outdated while all living expenses are increasing, causing salaried workers to constantly complain that they are having to "bend their backs" to pay taxes. In the same vein, revenue from personal income tax (PIT) has continuously increased and reached nearly 100,000 billion VND in the first 6 months of 2024, exceeding corporate income tax in the first 6 months of 2024.
“Tighten your belt” but still have to pay taxes
Most salaried workers reflect that the level of family deduction Taxpayers' allowance of 11 million VND/person/month and dependents' allowance of 4.4 million VND/person/month is too outdated and not enough to cover living and studying expenses.
Mr. Nguyen Hung (Hanoi) - employee salaried employee in Hanoi said that his total income is about 16 million VND/month and he regularly has to pay personal income tax. Mr. Hung shared that every month, the rent alone is 8 million VND/month. In the past 2 years, every 6 months, the landlord has increased the rent once with various reasons such as inflation, salary increase, and house price increase.
“The cost of living is constantly increasing, my wife just gave birth to a baby, my family is struggling to pay for expenses. I have never seen life as difficult as it is now. Income has decreased but the cost of living has increased. I have not had time to celebrate thanks to “If I get a raise, I have to worry about paying taxes. The deduction of 4.4 million VND/month/dependent is too low, not enough to cover expenses,” Mr. Hung shared.
Also working for a salary, Ms. Nguyen Phuong (Ha Dong, Hanoi) said that her monthly salary is 18 million VND. After deducting her son's family circumstances, Ms. Phuong still has to pay personal income tax every month. According to Ms. Phuong, tuition, meals, and boarding fees for primary school students in public schools alone are nearly 2 million VND.
“In addition to studying at school, children take all kinds of extra classes, from English to talent classes. Parents work during office hours, incurring the cost of hiring someone to pick them up. The family deduction of 4.4 million VND/month for one child is not enough, this deduction must be at least doubled to cover the cost of living in big cities like Hanoi and Ho Chi Minh City,” Ms. Phuong suggested.
In contrast to the difficulties of taxpayers, personal income tax revenue is constantly increasing. In the first 6 months of 2024 alone, personal income tax revenue was nearly 100,000 billion VND, exceeding the revenue from the state-owned enterprise sector by nearly 840 billion VND. Total personal income tax revenue in 2023 is over 155,000 billion VND. Of which, personal income tax from salaries and wages is up to 108,228 billion VND, accounting for the highest proportion (about 70% of total personal income tax revenue).
Speaking with Tien Phong reporter, a representative of the Department of Tax Management for Small and Medium Enterprises, Business Households, and Individuals (General Department of Taxation) said that they are synthesizing difficulties and problems regarding personal income tax policies and laws, tax management policies and laws from tax authorities at all levels and taxpayers. Tax authorities are researching and proposing when amending personal income tax policies and laws and tax management policies and laws.
Proposal to change family deduction by region
Previously, in early 2024, the Government requested the Ministry of Finance to study and propose a plan to adjust the family deduction level in calculating personal income tax to support and remove difficulties in people's lives.
Prof. Dr. Hoang Van Cuong - former Vice President of the National Economics University said that the goal of personal income tax is to regulate income between high-income earners and low-income earners. Personal income tax has been adjusted three times, but the family deduction level of taxpayer 11 million VND/month and dependents 4.4 million VND/month is not appropriate.
According to Mr. Cuong, the consumption level in each region is different. In the city, the family deduction for a child going to school of 4.4 million VND/month is not enough to cover the expenses. The authorities have just increased salaries, but the additional income must be taxable making the pay increase less meaningful.
Mr. Cuong suggested that the authorities should determine an appropriate tax threshold so that taxpayers’ lives and contributions to the state budget are not affected. The authorities should add reasonable spending deductions that they can prove.
Sharing the same view, economic expert Dinh Trong Thinh said that it is necessary to change the tax threshold and family deduction level in the direction of calculating by region. In big cities like Hanoi and Ho Chi Minh City, the household spending level and the tax threshold for taxpayers will be raised to about 16-18 million VND, and the family deduction for dependents will be raised to about 6-8 million VND. According to Mr. Thinh, this family deduction level can ensure that taxpayers can support their young children and elderly parents.
“Authorities need to review family deductions in personal income tax. Many countries allow deductions for reasonable expenses arising unexpectedly such as illness or investment when calculating personal income tax,” Mr. Thinh suggested.
After deducting family circumstances (taxpayer 11 million VND/person/month and dependent 4.4 million VND/person/month), personal income tax rates include the following levels: income from 5 million VND/month or less, tax rate 5%; from 5-10 million VND/month, tax rate 10%; over 10-18 million VND, tax rate 15%; from 18-32 million VND, tax rate 20%; from 32-52 million VND, tax rate 25%; from 52-80 million VND, tax rate 30% and over 80 million VND, tax rate 35%. |
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