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Saturday, July 20, 2024

Personal income tax and economic growth

By Tue Nhien

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Rising living costs and high personal income tax rates have forced many households and individuals to tighten their spending as their disposable income has shrunk in the aftermath of the Covid-19 pandemic and the current economic stagnation. Burden of personal income tax The National Assembly (NA) at its recent sitting had hot debate over the personal income tax said to be out of touch with reality. Many NA deputies stressed that provisions in this tax law, such as the tax threshold, tax ladders, and dependent tax deductions have not been adjusted to align with changes to the minimum wages, rising prices and inflation. Under intense debate is the amount of dependent tax deductions applicable since July 2020. Currently, this amount includes personal exemptions at VN11 million, plus VND4 million for each of the taxpayer’s dependents. Meanwhile, prices of almost all consumer goods and services in as many years have risen by 20% to 30%, resulting in higher living costs. However, it is by no means easy to amend the personal income tax, despite repeated suggestions to this effect in the past couple of years, as this tax contributes an increasing portion to the State budget. A report from the General […]
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