Taxing savings deposits - an ignorant and immoral proposal

Seven years ago, at the 10th Session of the 11th National Assembly held in October and November 2006, elected representatives "dissected" and unanimously rejected the proposal to tax savings interest (included in the draft Personal Income Tax Law) of the Ministry of Finance.

Yet now the chairman of the Ho Chi Minh City Real Estate Association has proposed taxing income from savings deposits of 500 million VND or more with the "noble" argument of directing cash flow into production and business (?!), but according to experts, that is a disguise for the motive of making money.

TSLE XUAN NGHIA,Former Vice Chairman of the National Financial Supervision Commission:
Unreasonable

This proposal directly affects the depositors, which is unreasonable. Because it is the type of capital that determines the existence of the commercial banking system. If we tax, we will only tax the profits of savings deposits, not directly tax savings deposits. But in the conditions of Vietnam, it is not appropriate to tax even the profits of savings deposits. The State has already taxed the profits of enterprises, so why tax the profits of savings deposits at this time?

People have the right to choose the field they invest in. In case they cannot choose, they deposit money in the bank, it is considered that the bank chooses to invest for them.How banks lend to which types of businesses is the bank's business. Banks are the most efficient financial allocators. So taxing savings deposits should not and cannot be done.

There are many ways to discourage savers, such as lowering deposit interest rates.Taxing savings deposits is a form of increasing deposit interest rates, increasing the cost of capital and thereby increasing lending interest rates.. In the end, the company can do nothing. Because all the tax costs will be added to the company's cost of capital.

TSALAN PHAN,Former Chairman of Viasa Fund Investment Fund atHong Kong:

Put pressure on the government to make profits

Real estate is now on the verge of bankruptcy so they have to find ways to say this and that. However, taxing savings deposits is not practical. Because in these difficult economic times, increasing taxes like this and that will only make the economy shrink rather than develop. Therefore, this proposal is just to put pressure on the Government to gain some benefits for themselves.

In the world, they tax on income. That means if you have a high income, you will be taxed more. If you have a lower income, you will be taxed less. Taxes must be equal, not like one person pays and another does not pay. A person who saves 1 billion, for example, earns 10 million in interest, adding up all of his monthly income, he will have to pay tax, not just the savings. However, even rich people with billions of dong do not easily deposit their money in the bank and pay taxes.

According to Dr. Le Xuan Nghia, former Vice Chairman of the National Financial Supervision Commission, taxing savings deposits should not be done and cannot be done. Photo: HTD

GrandmaNGUYEN THI CUC,Former Deputy General Director of the General Department of Taxation, Chairman of the Vietnam Tax Consulting AssociationMale:

Don't understand personal income tax!

The principle of calculating personal income tax for depositors is to calculate on the interest that the depositor receives, not on the deposit amount, for example, with the corresponding interest rate, the monthly interest received is 5 million VND, 10 million VND, ... then the tax rate can be calculated based on that. Meanwhile, the Ho Chi Minh City Real Estate Association proposed that deposits from 500 million VND or more are subject to tax asunfounded, lacking foundation and not understanding anything about personal income tax. Or more correctly, there is no ethics in calculating tax..

Previously, when drafting the Draft Law on Personal Income Tax, the drafting committee also proposed calculating personal income tax for people who deposit savings. At that time, the taxable level was 4 million VND/month, with a family deduction of 1.6 million VND/month. The drafting committee proposed a taxable level applicable to interest of over 5 million VND/month, 60 million VND/year. However, after considering and consulting ministries, branches, experts and taxable subjects, it was found that this method was unreasonable and it was not known how to collect it. Savings deposits have their own characteristics, are divided into many types of books at each time, determining and synthesizing the annual average is very difficult and complicated. After consulting the State Bank and commercial banks, it was shown that it was impossible to collect interest from depositors' savings and caused difficulties for banking operations. Therefore, the content of calculating personal income tax for personal savings deposits was removed from the Law on Personal Income Tax.

The proposal of the Ho Chi Minh City Real Estate Association is not only inappropriate but also unrealistic and unfeasible. If the amount of VND500 million is set, the depositors will split it into VND499 million, so how can it be controlled? Besides, if the proposal is for the purpose of bringing capital into production and business, especially to clear the real estate ice, it will be even more difficult.People can transfer from VND deposits to USD or invest in gold..

TSLE DANG DOAN:

If you eat thick, you must accept the price.

Considering the current living conditions of retirees, workers, etc., they only live on their savings and consider the interest on deposits as income. If taxed, it is not good. It may benefit the State in terms of tax but it comes at the expense of social security. In addition, the proposal to impose taxes for the purpose of putting cash flow into production and business is baseless.In the past, real estate businesses made huge profits from the price difference between projects. Now that the market is quiet, they have to accept paying the price.. The proposal to tax deposits will disrupt the banking market, people will rush to withdraw money, and the system will be unstable.

In 2006, at the National Assembly forum, delegate Duong Thu Huong - Ha Noi provinceMale(former Deputy Governor of the State Bank, General Secretary of the Banking Association) gave three reasons why the State cannot yet tax savings interest:

The firstis the capital requirement for society, and banks are a strong and main capital mobilization channel of the economy. The activities of enterprises rely on bank capital up to 80%-90%. If people do not deposit anymore, how can banks have money to lend to enterprises for investment? If banks want to mobilize, they will have to increase deposit interest rates, and at the same time, they will have to increase loan interest rates. So it is clear that the benefits do not outweigh the disadvantages.

Mondayis the nature of Vietnamese savings depositsMalewith other countries is completely different. In VietnamMale, savings are to ensure life in old age, not for investment like many other countries. In VietnamMale, because the social security system is not good, many people have to save money to prepare for illness, to spend when they retire or are no longer able to work. In developed countries, people's social security is great, when they get sick and go to the hospital, they don't have to spend a penny even if they are seriously ill, when they retire, their pension is enough to live on, and if I have any extra money, I save it, then I invest it. At that time, it was right to be taxed. But in VietnamMalesaving we are not like that, I also sincerely hope that this is the wish of many people, we need to consider this carefully.

TuesdayOur inflation is still very high, the sender does not get much. For example, the interest rate is 9%/year but inflation is 8.4%/year, the real interest that reaches the recipient is not worth much that has to be taxed.

We have to encourage and motivate people to trust the bank and deposit their money. Now that this has happened, people will not deposit their money anymore. This will be very disadvantageous.

According to Phapluat-M