Over the past years, crude oil and import-export taxes have made up a large proportion in budget collection. However, too heavy a reliance on crude oil is not a lasting solution in Vietnam’s budget collection structure compared to other countries in the region and the world. At a recent seminar, economist specialists underlined the need to reform this structure by increasing revenue from new sources of tax.

Several economic specialists pointed out unstable and risky factors behind Vietnam’s budget collection structure. They said that the current budget collection scale greatly relies on non-renewable natural resources such as crude oil which makes up 30 percent of total budget revenue, while revenue from import taxes is showing a decline. Equality and efficiency in budget collection is not rational among regions and localities, together with mounting pressure for change in the revenue structure in the context of international economic integration.    

In many countries in the world, their budget collection structure is not heavily reliant on import-export taxes, but on property and personal income taxes. These are stable and lasting sources helping ensure equality in society.

Do Ngoc Huynh, policy advisory team leader under the Ministry of Finance said, “To have such a stable and lasting budget collection structure, we should identify revenue sources first and devise policies later. Such a structure should go hand in hand with budget spending which will be reduced flexibly to a level on a par with the regional level.” 

Some specialists suggested that taxes being imposed on all sectors and areas be re-examined to ensure equality among them. This means those that bring much profit will pay high tax rates corresponding to their revenue.

Vu Dinh Anh, a specialist from the Finance Sciences Institute said the State budget is made up of domestic production activities, import-export activities and even the exploitation of natural resources. However, he said a paradox in the current budget collection structure is that several sectors make big profits from business activities, but contribute a small proportion to the budget. Therefore, he suggested the budget collection restructure be reform to ensure equality among taxpayers. He also warned that revenue sources from tax will be affected after Vietnam has implemented WTO commitments on tax cuts. 

“Our task is to re-calculate new and old tax rates in the budget collection structure and forecast their changes,” said Mr Anh.

Many specialists proposed improving revenue sources from several highly stable taxes such as value added tax (VAT) as other countries do. Nguyen Van Phung, deputy head of the Tax Policy Department under the Ministry of Finance said, “We can improve the sources in two ways. First, we extend the tax-payment scale by reducing the number of commodities in the current list of 28 commodities subject to tax exemptions so far. Second, we should reconsider the current tax rates of all commodities and raise them to a common rate of 10 percent. Many commodities should have been subject to 10 percent tax, but in fact we have applied a rate of five percent only.”

Personal income tax and property tax are considered those of high equality, but they have not been collected properly in Vietnam. In many countries, property tax even makes up 40 percent of the budget revenue, while the figure in Vietnam stands at 0.7 percent.