Increase family deductions to match price index

Many ministries, sectors and localities have proposed raising the family deduction level to 16 - 18 million VND/month to match current prices and living standards.

Many ministries, sectors and localities have proposed raising the family deduction level to match the current price index. Photo: Vu Long

Price index increases, family deduction remains unchanged

The Ministry of Finance is comprehensively reviewing and evaluating the Personal Income Tax Law, including the level of family deductions, to report to the Government, the National Assembly Standing Committee and the National Assembly for consideration and amendment.

Previously, many provinces and ministries proposed to increase the family deduction level. Many opinions said that the current deduction level is no longer suitable for reality, it should be increased to about 16 - 18 million VND/month to ensure fairness for taxpayers in the context of increasing living costs.

Under current regulations, the family deduction for taxpayers is VND11 million/month and VND4.4 million/month for each dependent. This level was adjusted in 2020, after remaining unchanged since 2013.

In the context of rising living costs, many localities believe that the current family deduction level is no longer suitable. According to the General Statistics Office, Vietnam's consumer price index (CPI) maintains an average increase of 3.5 - 4% per year, causing the actual value of the family deduction to decline. If calculated from the last adjustment in 2020 to now, the average price level has increased by about 10-15%, while the family deduction level remains the same.

According to the current regulations in the 2012 amended Law on Personal Income Tax, if the CPI increases by more than 20% compared to the time the law takes effect or the most recent adjustment, the Government will submit to the National Assembly Standing Committee for consideration to adjust the family deduction level to match price fluctuations. However, many opinions say that this regulation is still rigid and does not promptly reflect socio-economic fluctuations.

Many ministries, sectors and localities have proposed increasing the family deduction to a minimum of VND16 million/month for taxpayers and VND5-8 million/month for each dependent, to match the current living standards and living expenses.

Accordingly, the Ministry of National Defense proposed to increase the deduction level to 17.3 million VND/month for taxpayers and 6.9 million VND/month for dependents. Ha Tinh province proposed a higher level, with 18 million VND/month for taxpayers and 8 million VND/month for each dependent. Son La province proposed to apply 16 million VND/month for taxpayers and 5 million VND/month for dependents.

Many people and experts agree

On the people's side, many people expressed their agreement with the increase in the family deduction level. Ms. Nguyen Thanh Mai (Hoang Mai district, Hanoi), an office worker, shared: "My salary is about 15 million VND/month but living expenses take up almost all of it. If the family deduction level is kept as it is now, I still have to pay taxes, while in reality I don't have much money. If it is increased to 16 - 18 million VND/month, it would be more reasonable."

Meanwhile, Mr. Le Trung Kien (Hai Ba Trung, Hanoi) said that regional factors should be considered when adjusting: "The cost of living in Hanoi is much more expensive than in the provinces. If there is only one general family deduction, it is not really fair. We can consider the deduction by region, like the regional minimum wage."

Agreeing with this proposal, Dr. Dinh The Hien - economic expert shared: "This is a very welcome proposal, people have been waiting for this for a long time. If it can be implemented, it is very reasonable."

The expert analyzed: “The family deduction level is based on the minimum living standard to avoid personal income tax. The adjustment of this level must be carefully studied and calculated. But clearly, if considered from the inflation perspective, the average increase each year is from 3.5 - 4%. Thus, the family deduction level must also increase correspondingly to the basic inflation rate of Vietnam to ensure that the actual value is not reduced.”

Dr. Dinh The Hien also pointed out that the delay in adjusting the family deduction level puts workers at a disadvantage. “The time from promulgation to adjustment is often long. Before amendments, they must be researched and submitted to the National Assembly for approval, so there is a certain delay. Therefore, taxpayers - especially workers - always suffer due to currency devaluation. This shows that the family deduction level needs to be adjusted promptly to match the price index, ensuring fairness for taxpayers,” the expert emphasized.

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