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| The Ministry of Finance proposes financial solutions to support the economy with a total amount of about VND700 trillion. Illustration photo: H.Anh |
Important role for the economic recovery
The Ministry of Finance said that in the face of the impact of the Covid-19 pandemic and the impact of international economic and political issues on the country’s socio-economic development, production and business activities of businesses and people’s lives, the Ministry of Finance has proactively researched, proposed, submitted to competent authorities as well as promulgated according to its authority solutions in the financial sector with a total amount of about VND700 trillion, especially solutions for extending, exempting, and reducing taxes, fees, charges, and land rents (such as extending value-added tax (VAT), corporate income tax (CIT), personal income tax (PIT), special consumption tax (SCT)) and land rent; import tax, environmental protection tax and many fees, charges to support businesses, people and the economy.
Of which, the total scale of support solutions in 2020 was about VND129 trillion, in 2021 about VND145 trillion, and in 2022 about VND233 trillion. In 2023, the Ministry of Finance researched, proposed to competent authorities and issued according to its authority solutions on taxes, fees, charges and land rent applicable to 2023 with a total value of about VND196 trillion.
In 2024, the policy of 2% VAT reduction will reduce by about VND25 trillion; the reduction on environmental protection taxes on gasoline, oil, and lubricants in 2024 will reduce by about VND42.5 trillion in State budget revenue.
Thus, many support solutions for taxes, fees, charges, and land rent have been appreciated by the business community and people; helping businesses and people overcome difficulties, stabilize production and business activities to contribute to positive results in socio-economic development.
According to Mr. Nguyen Ba Hung, Chief Economist of the Asian Development Bank (ADB), during the Covid -19 pandemic, fiscal policy has shown an important role in the recovery of Vietnam’s economy. In 2023, the final year of the Socio-Economic Recovery and Development Program after the Covid-19 pandemic, fiscal policy has made an important contribution in supporting people and businesses, especially the 2 % VAT reduction policy has had a direct impact on bolster consumption, thereby helping manufacturing and service businesses recover faster.
Closely monitoring the actual situation and proposing appropriate solutions
Expert Nguyen Ba Hung said that in 2024, fiscal policy needs to continue to be the highlight to promote economic growth. In particular, in addition to tax and fee support policies, public investment plays a particularly important role, both supporting short-term growth and creating a premise for better long-term growth. “In terms of macro, it can be seen that fiscal and monetary policies in 2024 play an important role in economic growth. The role of fiscal policy needs to be emphasized more because monetary policy has stabilized and there is not much space left to reduce interest rates. Currently, Vietnamese Government has taken many different policy measures to accelerate and improve the efficiency of disbursement of public investment capital. These measures include a series of resolutions and directives focusing on different aspects of public investment disbursement,” said the ADB’s expert.
Affirming that the Vietnamese Government’s fiscal policy management is on the right track, Dr. Dorsati Madani, Senior Economist of the World Bank (WB) in Vietnam, said that the implementation of flexible fiscal policies has actively supported economic recovery. With flexible fiscal policies, taking businesses and people as the center is applying a counter-cyclical fiscal policy framework, responding to economic developments and contributing to minimizing the impact of economic shocks, stabilizing the macroeconomic environment, supporting economic growth and creating jobs.
Regarding this issue, in the regular Government meeting in March 2024 and the Government’s online conference with local authorities, the Prime Minister assigned the Ministry of Finance to urgently research and submit to the Government and Prime Minister before April 30, 2024 to consider and promulgate regulations on tax extension (VAT, CIT, PIT, SCT for domestically produced cars…), reducing registration fees for domestically produced and assembled cars, reducing land and water surface rent. The Government also assigned the Ministry of Finance to promptly consider and promulgate according to its authority or submit to competent authorities for promulgation policies to reduce taxes, fees and charges as implemented in 2023 to continue to remove difficulties and support production and business activities. In particular, the Ministry of Finance was assigned to summarize and evaluate the results of VAT reduction to report at the 7th Session of the XV National Assembly to consider and allow the implementation in the second half of 2024.
In the near future, along with the drastic and effective implementation of tasks and support solutions that have been issued, the Ministry of Finance will continue to coordinate with other ministries and agencies to closely monitor the actual situation and forecasts the socio-economic development situation to research and propose to competent authorities solutions for 2024 associated with the construction and assignment of annual state budget estimates to ensure the budget balancing capacity as well as for localities to be proactive in implementing local budget balance estimates.