Revenues from production and business decreased, what did the Minister of Finance say?

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The inaccurate revenue estimate situation has been overcome

In reviewing the results, Minister Dinh Tien Dung saidthe State budget revenue of 2018 and early 2019 was quite positive,increased by 8%in 2018 compared to the estimate.

The budget structure shifted positively, meeting the requirements of the Politburo and the National Assembly. Total domestic revenue in the period of 2011 - 2015 was quite high at 68%, but in the period of 2016-2018 it was up to a very high 80.3%. The proportion of crude oil collection was only about 4% of total revenue. Central budget revenues in the period of 2016-2018 accounted for about 55-56% of the total balanced revenue.

A question of voters' concern is that the forecast work carried out in 2018 was inaccurate. Although the total revenue largely exceeded the estimate, the revenue from 3 production and business areas decreased compared to the forecast and the amount of outstanding debts and tax losses was large.The Minister of Finance stated a number of reasons.

Firstly, the economy continued to maintain good growth momentum. GDP of 2018 increased 7.08%, exceeding the set target. Collection from land use feeincreased to 61.85 trillion VND, an increase of 29.75 trillion VND compared to the report to the National Assembly. Particularly, the last 3 months of 2018 58 trillion VND was collected. It was difficult to estimate this collection, due to the specific market, locality and project. Moreover,this is local decentralized revenue so the estimates were usually registered by the localities.

Explaining the decreasein collection of 3 production and business areascompared to the report to the National Assembly,according to the Minister, the reason was that despite economic prosperity, business activitieshave been improved butmany difficultiesstill exist, affecting the State budget collection.Specifically, in 2018, the number of newly established enterprises was 131,300, mainly small, medium and micro enterprises.But 107,000 enterprisestemporarily stoppedtheir operations or dissolved,thusthe payable tax was lost. While long established enterprises pay taxes, often new and large enterprises enjoy tax incentives, so they pay little tax.

Regarding subjectivity, the estimation of 2018 insome areas were very high compared to reality, especially in the three areas of SOEs, FDI and private sector. Learning from experience, in 2019, the estimates were more accurately adjusted. For example, revenue estimate of the SOE sector increased by 13.1%, the FDI sector increased by 30.1%, non-state sector increased by 20.4% while GDP growth and inflation were about 11%.

The idea that the proportion of revenue from central budget was declining and there was a risk of difficulties in achieving targets, causing negative impact, Minister Dinh Tien Dung expressed thataccording to the state budget decentralization, the Central budget hadonly 2 main revenue sources: import and export and crude oil. Recently, as we are integrateddeeply, many tariffs were cut to 0%, but the revenue from the two above sources still increased.

That is thanks to an increase in import and export turnover and better management of revenues. Collection policy continues to improve in the direction of reducing tax obligations and adding incentives under integration requirements. Simultaneously, financial management in general, especially Taxes and Customs, haspromoted reform and modernization to better serve the people and enterprises.

The amount of unrecoverable tax debts must reduce

Regarding the fight against loss of revenue, the head of the Ministry of Finance acknowledged that observing budgetary discipline was still not taken seriously in some localities.Trade fraud, tax evasion and appropriation of taxalso occurred in many places.The main reason was due to shifting the tax and customs management mechanism from pre-inspection to post-inspection withenterprises themselves taking full responsibility for declaring and paying taxes.

“We manage risk and post-inspection. There are many problems, such as law propaganda must do better. There should be solutions along with the transfer of management methods, pre-inspection to post-inspection, risk management, modernization of the Tax, Customs, facilitation, apparatus arrangement, streamlining payrolls for these forces. Without doing that, it is impossible to reduce the payroll. Recently, we have drastically improved. In May and June,about 20 provinces have merged tax sub-departments.The units have done very well but it is not simply to merge district A into B.Personnel issues, arranging and handling redundancy, the issues of expertise and systems and professional processes must be handled synchronously to not affect the operation”, said Minister Dinh Tien Dung.

The work of ideological educationand aspirationis also taken seriously in the spirit of not affecting the profession and work environment.

Tax debt has increased but the amount of recoverable tax debt decreased. The Ministry of Finance has reported to the Standing Committee of the National Assembly on the issue of early reduction of non-recoverable tax debts and it is expected to be submitted to ameeting of the National Assembly in October.

“Many enterprises are missing and tax cannot be recovered but with the accumulating 0.03% per day, this amount of tax debt continuously increases. In the past, few people pay attention to the number of enterprises closing or stopping operations, which lead to irrecoverable tax amounts. In the context that we are transforming our economic management approach, these problems have not yet been overcome”,said the leader of Finance.