The Vietnam Institute for Economic and Policy Research (VEPR) under the University of Economics and Business - Vietnam National University, Hanoi,  on May 25 announced Vietnam’s tax equity report 2017.

At the workshop to announce Vietnam's tax equity report 2017

VEPR Director Nguyen Duc Thanh said the report aims to give a full view of the budget collection system in Vietnam from the perspectives of developers and social activists.

The report focuses on evaluating the equity of the tax system, budget expenditures and tax administration issues as well as the involvement of citizens in building and implementing tax policies, he added. 

According to the report, Vietnam’s tax system still accounts for a relatively large proportion of the country’s gross domestic product (GDP) with the State budget collection making up nearly 25 percent of the GDP. 

The budget spending often exceeds the collection, making up close to 29 percent of GDP in 2016, after falling from the peak of 40 percent in 2009. 

Researchers said Vietnam is facing difficulties in balancing the State budget as the spending demand is increasing and the removal of tariff barriers in free trade agreements (FTA) reduces the budget collection from import-export activities. 

To reduce the State budget overspending, experts suggested increasing collection and reducing expenditures. 

The Government should take drastic measures to tighten regular expenditures such as streamlining and rearranging the apparatus, limiting expenditures for mass organisations, and speeding up divestment from State-run enterprises. 

The quick reduction of direct taxes after 2011 showed that the State budget collection heavily depends on consumption taxes, according to Associate Prof. Dr. Vu Sy Cuong from the Academy of Finance. 

Any proposal to increase consumption taxes should be taken in account because this might have negative impacts on equity in spending. 

The proportion of indirect taxes is likely to increase in the coming time if the draft Law on Value Added Tax 2017 is approved. 

The report also looks into the tax evasion and management in Vietnam.-VNA