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Tax burden to get heavier on the poor
The Saigon Times Daily
Monday,  Apr 16, 2018,22:03 (GMT+7)

Tax burden to get heavier on the poor

The Saigon Times Daily

Proposals by the Ministry of Finance to raise income for the State budget are coming one after another, all by either hiking current taxes or imposing new ones. Within months, the ministry has sought to raise the value added tax from the current 10% to 12%, maximize the environment tax on fuels from VND3,000 to VND4,000 per liter of petrol, and most lately a scheme to slap property tax on houses and other assets. The common ground is that all such taxes if enacted will directly hit the poor rather than the wealthy.

At a news briefing on Friday, Pham Dinh Thi, head of the Tax Policy Department under the ministry, gave numerous reasons to defend the ministry’s stance in collecting the property tax. The preferred option taken by the ministry is that all houses valued at higher than VND700 million will be subject to the tax, with a rate of some 0.4% on the amount above the threshold, while luxury cars, yachts, and planes will also come under the tax’s jurisdiction.

There is not much to challenge the tax on movable properties like luxury cars, yachts, and planes – although it is argued that such properties have been imposed high import tariffs – because such tax obligations are to fall on a very limited number of well-to-do people. The big worry is that the ministry seeks to collect the tax on houses, starting from a very low threshold.

At the aforesaid news conference, the ministry representative said the proposed tax is meant to restructure sources of income for the State budget and make the most of revenues from properties, and it is in line with international practices.

With a threshold of VND700 million, most if not all houses in urban areas will be subject to the tax. In

major cities like Hanoi, HCMC or Danang, it is almost impossible for homebuyers to find a house valued at less than VND1 billion. That is to say all urban dwellers albeit how poor they are will be subject to the property tax if it is passed by the legislation body.

Earlier, experts have repeatedly called on authorities to have measures to impose tax on properties of wealthy people, especially those with several houses. However, such a call to tax the second home – which not only helps ensure social justice but also prevents housing speculation and deflates the real estate bubble – has not been heard.

Taxes and fees are already a heavy burden on the people and business alike. The Finance Ministry at a sitting of the National Assembly late last year admitted that revenues for the State Budget already accounted for 23.9% of the gross domestic product, and experts have also lamented the high budget spending, at some 29% of GDP. To have such high figures, the people in general already have to shoulder heavy taxes, so any move to impose more financial obligations, especially on the poor, need to be taken into prudent consideration, for the sake of the well-being of the people.

The Saigon Times Daily

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