Budget revenue generation scenario

Identify the challenges

To ensure the target of State budget revenue, right from the beginning of the term, budget revenue solutions have been implemented synchronously and urgently by all levels and sectors. Budget revenue in the province has reached and exceeded the estimate assigned by the Central Government every year. Revenue sources have been strictly managed, ensuring timely collection and addition to the State budget.

The budget revenue in the area in 2015 reached 10,647.8 billion VND; in 2016 it reached 11,790.6 billion VND; in 2017 it reached 12,595 billion VND; in 2018 it reached over 13,000 billion VND (of which domestic revenue in 2015 reached 7,709.9 billion VND; in 2016 it reached 9,887.1 billion VND; in 2017 it reached 11,074 billion VND).

However, according to the assessment, economic growth is not commensurate with the potential, opportunities and development requirements of the province; some targets are difficult to achieve. Although the state budget revenue increases annually, according to the target set by the Resolution of the 18th Provincial Party Congress to reach 25,000 to 30,000 billion VND by the end of the term, this is a difficult task to complete.

The DKC Petroleum Depot Project invested by Thien Minh Duc Joint Stock Company, with a capacity of 86,000 m3, is expected to contribute a large amount to the provincial budget. Photo: LT

Regarding the cause, according to the Provincial Tax Department: The province's GRDP growth rate did not reach the expected level (according to the congress's target for the entire 2016 - 2020 period, it was 11-12%, but it is expected to reach the highest level of 10 - 11% in 2020). The production and business situation still faces many difficulties, the number of enterprises ceasing business or temporarily suspending operations is high, the proportion of enterprises with pre-tax profits, the proportion of enterprises generating corporate income tax payable is below 35%,...

On the other hand, due to the impact of the world economy in the recent period, a number of large projects committed to invest in Nghe An but have not been implemented such as: Quynh Lap I Thermal Power Plant; Kobelco Steel Factory; projects to upgrade beer production capacity of Saigon Beer and Hanoi Beer Companies,... The Central Government changed tax mechanisms related to collection policies (reducing hydropower tax rates, increasing cost allocation for enterprises belonging to State corporations, resource exporting enterprises are not entitled to tax refunds,...).

A large revenue source in the beer and alcohol sector is currently changing the production structure of breweries, shifting from high-value beer products to lower-value beer products to suit local consumption needs, leading to a reduction in the amount of special consumption tax payable in the locality.

At the same time, economic spearheads and key areas in economic development have not grown commensurate with their potential; Industrial parks and small industries are slow to fill up. Large projects in the area came into operation in the period of 2016-2018, but have not generated tax payments as expected, such as Hoa Sen Steel, MDF wood, VSIP, enterprises in the Southeast Economic Zone... Attracting foreign direct investment (FDI) is still limited, there are no large projects with driving force.

Hoa Sen Steel Project came into operation in the period of 2016 - 2018 but did not generate tax payment as expected. Photo: VP - LT

According to Mr. Ha Le Dung - Deputy Director of Nghe An Tax Department, the 2015 State Budget Law took effect from 2017 and converted a number of fees and charges of public service units into service prices, so unbalanced revenues (tuition and hospital fees) will no longer be accounted for in the State budget according to regulations.

This revenue is expected to be around 4,000 - 5,000 billion VND/year (In 2016: hospital fees collected 3,182 billion VND; tuition fees collected 260 billion VND). This is also one of the reasons why budget collection is difficult to achieve the set target.

Strengthening budget collection solutions

At a recent meeting of the Provincial People's Committee, according to Mr. Nguyen Xuan Hai - Director of the Department of Finance, the sector will resolutely direct the collection and exploitation of revenue sources, strengthen management against revenue loss; review and evaluate factors affecting the state budget revenue in the area.

Leaders of the provincial Tax Department answered questions from businesses at the 2018 Tax Dialogue. Photo: LT

At the same time, clarify the revenue shortfalls and potential revenue sources; propose specific solutions to recommend the Provincial People's Committee to direct sectors and levels to coordinate implementation. The head of the provincial Finance sector also said that in the coming time, the tax authority will closely coordinate with the Department of Natural Resources and Environment and the district-level People's Committees to urge the collection of land use fees and land rents for real estate business projects; strengthen inspection of project implementation progress to propose land recovery for projects that are slow to implement and do not fulfill tax obligations as prescribed.

To ensure the proposed scenario, in 2019 and 2020, it requires strong direction from all levels, departments, branches, localities, and enterprises. In the final stage, the Party Committee of the Provincial People's Committee is directing the review and development of growth scenarios for each industry, each field, and each key product. In which, specific targets and solutions are clearly identified to promote growth according to the planned targets. The heads of Party committees, authorities, and branches are responsible for the results of leadership and implementation of the targets of the locality, industry, and field in charge.

Vinh Tax Department officials inspect to prevent tax loss on motorbikes in Vinh City. Photo: Quang An

According to the general assessment of economic experts, there is still a lot of potential to promote socio-economic development in Nghe An province, especially after the Politburo issued Resolution No. 26-NQ/TW on the direction and tasks for developing Nghe An province until 2020.

Demonstrating some areas with the potential to stimulate growth, these are some projects such as: Quang Trung apartment renovation project (Vinh city), Vinh - Cua Lo Boulevard, Cua Hoi bridge, upgrading Binh Minh road (Cua Lo)... In addition, many large projects such as Masan beer and beverage factory in Area B - Nam Cam Industrial Park (1,661 billion VND); Trung Do construction materials production complex in Nghi Van commune, Nghi Loc district (1,025 billion VND); Biomass Fuel Vietnam biomass pellet factory in VSIP Industrial Park (20 million USD); Nghe An pharmaceutical factory (315 billion VND),... are being actively implemented by investors to put into operation soon. This is the basis for stimulating growth and creating revenue in the coming time.

State budget revenue in the province in the first quarter of 2019 is estimated at 3,354 billion VND, reaching 24.9% of the estimate assigned by the Provincial People's Council and increasing by 14.5% over the same period in 2018. Of which: Domestic revenue reached 3,014 billion VND, reaching 25.6% of the estimate and increasing by 23.2% over the same period in 2018; Land use fee revenue was 703 billion VND, reaching 29.8% of the estimate, increasing by 60.6% over the same period; Revenue from import and export activities: 340 billion VND, reaching 20% ​​of the estimate and equal to 70.4% over the same period in 2018.