The Deputy Chairman of the Economic Committee said that the current family deduction level is too low compared to people's living standards and suggested that the Government soon amend the Personal Income Tax Law.
This view was expressed by Ms. Doan Thi Thanh Mai, Deputy Head of the Economic Committee, at the group discussion session on socio-economics on May 25. The current family deduction level is 15.4 million (including personal deduction of 11 million and dependent deduction of 4.4 million) maintained since July 2020.
Ms. Mai said that this family deduction level is no longer suitable with the constant fluctuations in price levels, creating unfairness for taxpayers.
Currently, most consumer goods and services have increased by about 20-30% since the Covid-19 pandemic, causing people's living costs to increase, while their income has not increased, or even decreased.
"For many families, especially in big cities, the current family deduction is not enough to cover basic expenses," said Ms. Mai.
On the other hand, the Deputy Chairman of the Economic Committee analyzed that, in essence, personal income tax is a tool to help regulate the macro economy, contributing to increasing social welfare by reducing the income of high-income earners and redistributing it to lower-income earners.
However, the current regulation of 7 tax brackets does not ensure compliance with reality. "Reducing the number of tax brackets will make tax declaration, collection and management easier. Adjusting the number of tax brackets will widen the income gap between brackets to ensure fairness in income regulation," she suggested.
Ms. Doan Thi Thanh Mai, Vice Chairwoman of the Economic Committee, spoke at the discussion group on socio-economics on the morning of May 23. Photo: Nhu Y
Speaking on the sidelines of the National Assembly this morning, Finance Minister Ho Duc Phoc said that the agency is reviewing to amend the Personal Income Tax Law. He said that in the law and ordinance building program decided by the National Assembly, this term the Government will submit to amend 6 tax laws, including the Personal Income Tax Law.
"We will research and collect opinions from affected subjects and social classes to amend the law to suit people's actual income, creating development momentum," Mr. Phoc told VnExpress.
Many National Assembly deputies also proposed to speed up the revision of the Personal Income Tax Law to support taxpayers. Deputy Tran Hoang Ngan said that the total demand has decreased, purchasing power is weak, while the family deduction level is slow to be considered for revision. "People whose income is subject to tax deductions are having to shoulder many expenses, and are greatly affected by the decline from two years of the pandemic, and now the economic growth has slowed down," said Mr. Ngan.
According to him, Vietnam's public debt is decreasing, in 2022 it will be about 38% of GDP and much lower than the ceiling allowed by the National Assembly (55% of GDP), so there is budget space to consider increasing the family deduction level.
The current method of determining the family deduction for dependents is to take 40% of the family deduction of the taxpayer himself. This rate is criticized as too low. Mr. Ngan said the increase in the family deduction should be calculated by the agencies. However, this level should be quickly adjusted to suit people's income and support taxpayers.
Delegate Hoang Van Cuong, member of the Finance and Budget Committee, also said it is necessary to increase the deduction for dependents (children and parents), currently 4.4 million VND per month.
At the same time, the authorities need to review and change the tax bracket structure, which is currently 7 brackets with the lowest bracket being 5 million VND, tax rate of 5% and the highest bracket being 80 million VND, tax rate of 35%. Changing the tax bracket structure, Mr. Cuong said, will ensure increased revenue and encourage high-income earners to pay taxes when amending this law.
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