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Help businesses increase profits

On the afternoon of November 20, discussing VAT reduction in the first half of 2024, National Assembly delegates agreed with the Government's proposals.

According to delegate Nguyen Duy Thanh (Ca Mau delegation), global trade is forecast to continue to be difficult due to geopolitical fluctuations and the risk of economic domination. Therefore, economic growth in 2024 depends heavily on domestic consumption, while VAT has a direct impact on reducing selling prices of goods and services and increasing consumer demand.

According to the delegate, total domestic consumption demand will maintain an increase of around 10% in 2023 despite negative impacts, proving that the VAT reduction policy has promoted the necessary value, so it should be continued in 2024.

Agreeing with the above statement, delegate Nguyen Tao (Lam Dong delegation) assessed that the National Assembly's resolutions and the Government's drastic implementation of finance and budget solutions have had a relatively positive and effective impact in supporting businesses and people, initially stabilizing production and business, helping people's lives return to normal, contributing to stabilizing the macroeconomy, creating favorable conditions to restore economic growth...

However, businesses are still in the process of recovery and are forecasted to face more difficulties, inflationary pressure remains high, and growth may be lower than the proposed plan. Therefore, delegate Nguyen Tao said that it is necessary to continue to have specific solutions on financial policies to accelerate domestic consumption in 2024 and the following years.

National Assembly delegates agreed with the proposal on continued VAT reduction policy in the first half of 2024 of the Government. Photo: Quochoi.vn

However, National Assembly delegates also raised some comments to improve efficiency of this policy. In particular, delegate Nguyen Duy Thanh proposed to consider applying a common reduced VAT rate to all goods and services that have a close relationship with each other. Distinguishing between subjects of VAT reduction can affect economic relations, creating inequality in the market.

Concerns about the impact on the budget

Commenting on the impact of the VAT reduction policy, delegate Nguyen Thi Viet Nga (Hai Duong delegation) suggested that the Government look more closely to assess how tax reduction impacts local budgets and is this the reason why some economic targets for 2023 are not completed, especially GDP target?

Similarly, delegate Nguyen Quang Huan (Binh Duong delegation) commented that tax reduction brings direct benefits, but people can also be affected indirectly later, when state budget revenue is not guaranteed, it will affect national socio-economic development plan. Therefore, he suggested that there should be longer-term policies, because it is impossible to "reduce taxes forever", people like to reduce taxes in the short term because they can buy goods at cheap price and stimulate consumption, but it is necessary to research how much will these stimulus policies add to GDP?

However, the delegate Tran Hoang Ngan (Ho Chi Minh City delegation) said that reality has proven that when the Government submits to the National Assembly proposals on reduction of taxes, fees and extension of land rent, the total revenue still increases.

“This is like nurturing revenue sources, supportive policies will help production, business activities as well as consumption of goods become more convenient. As the economy continues to develop, revenue sources will continue to increase. Typically, in the past three years, total budget revenue has still reached and surpassed the estimates and contributed to reducing budget deficit and reducing public debt," the delegate stated.

Minister of Finance Ho Duc Phoc said that VAT reduction is a short-term solution, so long-term solutions are still needed for economic growth. Photo: Quochoi.vn

In response to the above opinions, explaining and clarifying a number of issues raised by National Assembly delegates about VAT reduction but only applicable to certain subjects, Minister of Finance Ho Duc Phoc said that this proposal aims to reduce VAT pressure on the state budget.

Furthermore, according to the Minister, VAT reduction is only one of many measures and is only effective in the short term, not in the long term, so it is still necessary to have long-term solutions to stimulate consumption for economic growth such as removing obstacles in investment, production and business; expanding markets and capital sources; applying science and technology and increasing labor productivity...

With the comment that the proposal n VAT reduction is a short term solution, according to the Minister, taxes affect the improvement of public financial capacity, so in the short term, tax reduction is to create conditions for businesses to overcome difficulties, then tax rates will increase - this is an inevitable trend. In parallel, other measures to stimulate consumer demand will be applied to promote GDP growth.

Regarding delegates' concerns about the applicable time of VAT reduction, the Minister of Finance said he would report to the Government to specifically assess the impact of this policy to report to the National Assembly.

Concluding the discussion session, Vice Chairman of the National Assembly Nguyen Duc Hai said that the National Assembly Standing Committee will direct the drafting agency, verification agency and relevant agencies to review the comments to develop a report on explaining and revising contents of VAT reduction and submitting it to the National Assembly for consideration and approval.