Finance Minister: No VAT increase, further research on property tax

Reporting to the National Assembly at the discussion session on the morning of May 26, Mr. Dinh Tien Dung - Minister of Finance said that after receiving opinions from businesses, people, and experts, this agency decided not to increase VAT to 12% as planned, but to keep it at 10%. Instead, the Ministry of Finance will restructure goods and services subject to 0% and 5% tax to ensure fairness, limit social security policies being integrated into tax policies, and lose the neutrality of taxes.

Previously, in proposals made in mid-2017, the Ministry of Finance wanted to increase the VAT rate for goods and services subject to 5% tax to 6%; and the group of goods and services subject to 10% tax to 12% from the beginning of 2019.

According to analysts, this proposal is not actually intended to protect low-income people. "The State's reduction of income tax but increasing other taxes on consumers such as value-added tax (VAT) is a form of "siding with the rich and pushing the tax burden onto the shoulders of the entire population," said Dr. Bui Trinh.

Also at the discussion session, referring to property tax, the Minister of Finance said that the Ministry will continue to study this content after receiving comments from ministries, branches and people..

He said the recently published draft Law on Property Tax stated the goal of taxing property to increase revenue for the budget, but "this is only a secondary goal."

"The property tax will be designed to create social justice, ensure transparency, and fight corruption," Mr. Dung affirmed.

Illustration photo

According to the draft Law on Property Tax announced by the Ministry of Finance for comments, this agency proposed to impose tax on apartments, residential land, land for building apartments, business land... with a value of 700 million VND or more, with a tax rate of 0.4% per year (for the value exceeding 700 million VND). This proposal of the Ministry of Finance received many opposing opinions when it was said that the tax threshold of over 700 million VND would create unfairness between low-income people and rich people.

Regarding environmental protection tax and special consumption tax, Mr. Dung said, the Ministry of Finance will study and amend in the direction of expanding the subjects, expanding the tax base, adjusting the tax rate reasonably, in accordance with the need for environmental protection and consumption orientation.