VietNamNet Bridge - The Ministry of Finance’s warning about the lack of VND32 trillion for state budget expenditures this year has raised concerns among businesses, as the ministry could try to raise domestic taxes and fees to ease the deficit.

Being a member of many free trade agreements, Vietnam will have to gradually cut many tax categories to zero percent, which will lead to a decrease in state budget revenue. 

Since April 1, 2015, the import tariffs on 3,200 products from Japan have been cut to zero percent within the framework of the Vietnam-Japan Economic Partnership Agreement. The zero percent tax rate will be applied to many more products from the country in the time to come.

Since March 30, 2015, Vietnam has begun applying preferential tariffs on South Korean sourced imports within the framework of the ASEAN-South Korea Free Trade Agreement (AKFTA) with a tax rate of zero percent applied to many product items.

A survey on the possible impact of the AEC on Vietnam’s economy found that Vietnam would lose $320 million a year in import tax, or 75 percent of the total tax collected from ASEAN imports.

Raising domestic taxes and fees is the method the Ministry of Finance (MOF) plans to apply to offset the loss of revenue.

The decision on increasing the environmental fee by 300 percent was released a couple of weeks ago. The decision on raising the toll for the 30 kilometer Phap Van – Cau Gie highway to VND5 million at maximum was made some days ago.

The moves, as Dr. Le Dang Doanh commented, are the examples showing that MOF is trying every possible way to collect more money for the state budget.

A local newspaper quoted its source as saying that 102 fee collection stations would be set up in the next five years. In some localities, the distance between two fee collection stations could be less than 70 kilometers.

The source said that while the state budget is limited and the ODA (official development assistance) capital for transport projects is declining, the government would have to call for capital from private investors. And once private investors join transport projects, they would ask to raise fees to help them recoup the investment capital quickly.

The newspaper quoted an analyst as saying that local authorities, thirsty for capital for development projects, would also set up new kinds of fees and increase existing fees, to raise funds.

Meanwhile, the 2014 report on Vietnam’s tax collection released by Vietnam Report, a credit rating firm, showed that Vietnam’s tax collection level is higher than other regional countries, 20 percent vs 10-16 percent.

Tran Thuy