The scope of subjects entitled to a 2 VAT reduction as proposed by the Government is appropriate

Mr. Le Minh Nam, Standing Member of the Finance and Budget Committee of the National Assembly, Standing Vice Chairman of the State Auditing Science Council, a member of the National Assembly of Hau Giang delegation.

How do you evaluate the proposals in the Government’s report on continuing to implement the VAT reduction policy?

Currently, in the context of economic difficulties, the State has used tax policy as an important tool to implement fiscal policy to support, and serve the management and administration of socio-economic as well as ensuring state budget revenue. Accordingly, the Government is proposing the National Assembly approve the policy of reducing VAT by 2% at this 5th Session with the plan to reduce the VAT rate for most of the items currently subject from 10% to 8%, the application period is from July 1, 2023, to the end of December 31, 2023.

When the Government made the above proposal, it had to be based on calculations and balances on specific impacts on many fields, and also based on experience from applying the VAT reduction policy in 2022. The use of the VAT reduction policy in the current context will have a positive impact on helping people to use resources more efficiently when purchasing goods and services, thereby stimulating demand, promoting enterprises to have more conditions to provide products and services, from which enterprises recover, have revenue and return to contribute more to the state budget.

According to the verification assessment of the Finance and Budget Committee of the National Assembly, in 2022, the solution to reduce VAT indirectly stimulated domestic consumption demand to increase. Total retail sales of consumer goods and services in 2022 increased by nearly 20% compared to the previous year, domestic VAT collection did not decrease but increased by 10% over the same period last year. However, the context of 2023 is more different, so the Government’s adjustments in the report are reasonable, because the implementation of tax policy is not only aimed at socio-economic management but must also aim at the effective results, as well as the scope of impact must be positive.

There are many different opinions on expanding the scope of objects and the time of VAT reduction, what is your opinion on this issue?

According to the Government’s report, groups of goods and services currently applying the 10% VAT rate will be reduced to 8%, but excluding some of the following groups of goods and services: telecommunications, information technology, financial activities, banking, securities, insurance, real estate trading, metals, prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products, goods and services subject to excise tax.

The scope of subjects proposed by the Government is appropriate. If widely applied, many goods and services will be subject to control, not prioritized and not recommended for consumption. Especially items subject to excise tax should not be deducted VAT. This has all been specifically assessed by the Government to make a decision. Moreover, the context of the world economic slowdown will greatly affect the budget revenue forecast this year, so if applying tax reduction on a large scale, it will negatively affect the 2023 budget plan.

Regarding the time of application, similar to the proposal on objects to be reduced VAT, the Government has also given reasonable considerations, helping to ensure that the policy is implemented and is pervasive throughout the country. Six months is not a short time, it will also boost the economy – society. This issue has also been considered based on practical experience in implementing VAT reduction in 2022.

For effective enforcement, what issues should relevant agencies pay attention to, sir?

When the policy is set, the Government needs to pay attention to the operation to make the policy effective. Reducing taxes means reducing state budget revenues, but how to stimulate demand, help businesses return to work, and contribute to the budget and other revenues, thereby ensuring the balance of the economy. In addition, implementing the VAT reduction policy needs to be synchronous and comprehensive with other financial policies to resonate with the positive development of the economy.

Thank you Sir!