The Minister of Finance, Mr. Dinh Tien Dung explains to the National Assembly about budget allocation

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Mr. Dinh Tien Dung explained to the National Assembly on November 1, 2016. Photo: Thai Binh.

Ensure local resources

On November 1, 2016, the National Assembly discussed the results of allocation of the State budget in 2016, the estimate of the State budget and the plan for allocation of the State budget in 2017.

The most concerned content that many delegates discussed was the budget allocation rate in 2017, especially in the areas with an increasing budget such as HCM City and Danang.

The Minister of Finance, Mr. Dinh Tien Dung also spent most of the time in the afternoon to explain this content for the National Assembly.

According to the Ministry of Finance, the budget allocation proportion is a very important problem to solve the relationship between the State budget and local budgets. Under the provisions of the Constitution in 2013, the unified budget includes the State budget and local budgets, and the State budget plays an important role in the unified budget.

In order to put the contents of the Constitution into Law, the Law on the State Budget in 2002 and 2015 regulates that the State budget and local budgets which are decentralized, enjoy 100% from specific revenues (including value-added tax, special consumption tax, environmental protection tax of domestically produced goods, corporate income tax and personal income tax).

Accordingly, the State budget needs to ensure that each province has sufficient resources to perform the tasks of socio-economic development on the basis of principles, criteria and the State budget allocation norms which are regulated by the National Assembly Standing Committee. The proportion of budget allocation is kept stable for 3-5 years.

The Minister of Finance, Mr. Dinh Tien Dung stressed: For financial year 2017, the additional balance or the collection rate will be calculated based on the estimate of revenues and expenditure under the norms.

In addition, 63 provinces and cities in Vietnam have clear differences in area, population, geographical features, and infrastructure conditions for socio-economic; especially the capability for development of the economy, which plays an important role in the possibility of budget collection.

“Understanding the importance of budget allocation in proportion to localities, we have tried to handle the problems to ensure equality among provinces and cities", the Minister of Finance, Mr. Dinh Tien Dung reported.

Ensure resources for the "leading" areas

Regarding the budget allocation proportion of localities with large revenue, the Minister of Finance, Mr. Dinh Tien Dung said: On the basis of allocation norms which are regulated by the Government and the National Assembly Standing Committee, the key areas with high revenue will receive an increase of 30% - 70% in budget allocation compared to other provinces.

In addition, Hanoi and HCM City are special municipalities which will be allocated an additional 70% budget for economic operations and handling of environmental issues to ensure security and orders for current population.

Although there have been a priority for provinces and cities, the Minister of Finance, Mr. Dinh Tien Dung still focuses on budget revenues. In 2017, there will be 10 provinces out of 13 provinces reduced from 20% to 30% compared to the period 2011-2016.

"The proportion of local budget revenues after each period of budget stabilization is reduced in line with the provisions of the Law on State Budget. However, if it is reduced drastically, it may negatively affect the resources to ensure socio-economic development. On the other hand, the Politburo has also had some resolutions and conclusions on orientation and tasks for localities", the Minister of Finance, Mr. Dinh Tien Dung said to the National Assembly.

Although the resources are limited, according to the estimate of the State budget in 2017, the Ministry of Finance submitted to the Government and the National Assembly for spending of 14,450 billion vnd to support these localities, ensuring the operations of provinces and cities.

According to the Minister of Finance, Mr. Dinh Tien Dung, during the construction of the estimate for budget allocation, the Ministry of Finance has reported to the Government and the Prime Minister not to reduce the budget allocation too much to support provinces and cities for development.

"We believe that in our country every province and city has a close relationship on the basis of emotion, responsibility, business as well as legal regulations. The economy in key areas will be stronger and more sustainable when the other 47 provinces have sufficient resources to develop stably and vice versa. We hope that along with the economic development of the country, there will be more and more provinces contributing to the State budget, thereby reducing the amount of current budget allocation", the Minister of Finance, Mr. Dinh Tien Dung concluded the 30-minute speech to the National Assembly.

Determined to successfully complete financial tasks - State Budget 2016 VCN- This title is confirmed by the Minister of Finance, Mr. Dinh Tien Dung at the online ...

However, after the Minister of Finance finished the explanation, Mrs. Nguyen Thi Quyet Tam (a delegate from HCM City) and Mr. Nguyen Thanh Quang (a delegate from Da Nang) continued to recommend the Minister to explain and clarify some of the contents related to the proportion of budget allocation in HCM City and Da Nang. The questions were fully responded by the Minister of Finance, Mr. Dinh Tien Dung at the hall.