VietNamNet Bridge – The State Bank of Vietnam has proposed the Ministry of Finance to tax gold trade. However, the proposal has not been applauded by the public.

Le Minh Hung, Deputy Governor of the State Bank of Vietnam told Dan tri newspaper that the central bank has suggesting imposing taxes on gold trade, emphasizing that in other countries in the world, gold trade establishments all have to pay VAT and luxury taxes.

Hung said that the principle the central bank is following when managing the gold market is making gold less attractive to people.

Since the State does not encourage people to keep gold, the central bank believes that the state should impose luxury tax as well. At present, gold only bears the export tariff of 10 percent, while import gold materials do not bear tax.

The State does not have the function of stabilizing the gold prices, because gold price is not considered when experts calculate the consumer price index (CPI), and the gold price fluctuations would not affect the national welfare and people’s livelihood.

With the current gold price now higher than the world’s price by 3 million dong per tael, people who keep big amounts of gold would get benefits, while the credit institutions mobilizing capital from the public now suffer.

A report by the State Bank of Vietnam said over the last six months, credit institutions have bought 60 tons of gold so far to finalize contracts, and they still need some 20 tons more, which means that banks would need some two months more to buy enough gold.

However, the attempting plan by the State Bank to impose luxury tax on gold trade has been facing the strong opposition from experts, who say it would be unreasonable to tax people’s savings as well.

Thu, a teacher in Dong Da district, said her savings have been used to buy gold, simply because she is worried about the local currency depreciation, while she is not a gold trader or speculator.

“I feel as if I have my pocket picked, if I have to pay tax for my assets which have been accumulating for the last many years,” Thu said.

She has warned that by taxing gold, the State would fail to reach its goal, while a black market would take shape. The State would not be able to prohibit people to keep gold, unless people are not more worried about the local currency depreciation.

Meanwhile, the owner of a gold business said gold is not a luxurious product to bear luxury tax.

He went on to say that taxing gold cannot be found in any countries in the world, including China and India, the biggest gold consumers in the world. Meanwhile, gold trade companies now have to pay the corporate income tax already.

Dr Vu Dinh Anh, a well-known economist, also thinks that the State Bank would not succeed in its plan to reduce the public’s gold demand if it imposes luxury tax on gold.

He said on Tien phong that the luxury taxation would not ease people’s demand for keeping gold – a good choice to preserve their assets.

Tran Thanh Hai, General Director of the Vietnam Gold Trade and Investment Company, also said luxury tax should be imposed on luxurious products such as beer, wine, tobacco, cars or casinos, while gold should not be considered as a luxury product, because even farmers also keep gold

Compiled by Thu Uyen