Vietnam can be a leader in tax reform: Oxfam

Vietnam has the potential to become a leader in tax reform, said Johan Langerock, tax policy expert of Oxfam at the Vietnam Fiscal Policy and Development Forum 2019 themed “Towards a Fair Tax System’ which opened in Hanoi on November 13 with scientists, managers, policy-makers, and business representatives in attendance.
vietnam can be a leader in tax reform oxfam

Johan Langerock, tax policy expert of Oxfam

Upon addressing the forum themed “Towards a Fair Tax System", Langerock noted that the country’s economic growth reached a 10-year high of 7.1 per cent last year, with this strong economic momentum expected to continue for the remainder of the year.

The nation has been transformed from one of the world’s poorest countries that suffered from frequent food shortages, to a lower middle-income economy that is currently a leading exporter of rice, seafood, coffee, and other commodities.

The official poverty rate has fallen from 58 per cent in the early 1990s to less than 10 per cent today.

Despite this success, the country’s extraordinary economic track record has not been accompanied by a similar pathway in tax revenue. Most notably, compared to the size of the economy, tax revenues nationwide have been decreasing in recent years.

Langerock believes that in the long term this could pose a danger to the sustainability of the country.

He noted that decreasing tax revenues represent a concerning trend for several reasons. Mainly, it means that the tax system is failing to collect and redistribute created income and wealth in the country.

Several reports already indicate that the benefits of the nation’s economic growth are increasingly going to the wealthiest 10 per cent of the population.

According to the Oxfam representative, one of the biggest factors causing a decrease in tax revenue is the focus on lowering corporate income tax rates, along with the existence of many tax incentives that are in place for foreign investors.

This means that while revenues decrease, tax expenditures have remained high. As a result, export-led industrialization has seen significant development, at the expense of growth among agricultural and small businesses.

It is therefore inevitable that tax expenditure policies have contributed to the country’s economic growth, boosting investment in the process.

However, it must be contemplated that now is the time for the nation to rationalise tax expenditures that are placed on large companies.

Up until now, Vietnamese authorities have not been paying enough attention to performing efficient or effective analysis of tax expenditure policies. The social cost of tax expenditures remains too large to be ignored.

According to the OECD, the revenue loss stands at an estimated 1 per cent of GDP, representing a staggering amount of over VND50 trillion.

This amount could potentially finance 25 new 1000-bed hospitals nationwide. When tax revenue collection on large companies falls, either pressure to levy higher VAT rates on ordinary citizens increases, or fewer public services are delivered.

Langerock expressed his belief that the nation could get rid of its largest tax incentives without growth or competitiveness suffering.

According to a recent survey conducted by Grant Thornton on private equity prospect nationwide, 69 per cent of replies consider the increase in disposal income and middle-income classes as the most important factor for investing in the country.

Furthermore, 60 per cent consider high and stable economic growth, whilst only 13 per cent consider government incentives and subsidies as the most important factor.

The Oxfam representative said ASEAN countries are pushing one another into an aggressive race to the bottom in terms of corporate taxes.

Regional firms have seen their tax rates lower over the last decade. In such an environment, only large companies and wealthy shareholders win at the expense of essential public services for ordinary citizens.

He also recommended the Vietnamese authorities can proceed in two ways, noting that some tax incentives should be eliminated following an impact assessment.

In addition, as the chairman of ASEAN in 2020, Vietnam should make it a priority to raise awareness, in addition to debating the issue of tax competition and tax incentives at a regional level. Both steps should lead to an increase in tax revenue in both a fair and equitable way, according to the Oxfam tax advisor.

He pointed out that this will lead to inequalities decreasing whilst the Government will have more resources to invest in health, education, and the fight against climate change.

vietnam can be a leader in tax reform oxfam

VEPR President Nguyen Duc Thanh

At the forum, representatives from the General Department of Taxation and Vietnam Institute for Economic and Policy Research (VEPR) also delivered in-depth reports on tax expenditure in Vietnam.

They also gave some recommendations for the Government in order to use tax incentives effectively within the context of a budget deficit and high public debts.

Source: VOV

Related News

Vietnam, Korea Customs sign AEO MRA

Vietnam, Korea Customs sign AEO MRA

VCN- The Director General of the General Department of Vietnam Customs (GDVC), Mr Nguyen Van Tho, and the Commissioner of Korea Customs Service (KCS), Mr Ko Kwang Hyo, signed the Authorized Economic Operator Mutual Recognition Agreement (AEO MRA) on the afternoon of December 24, at the GDVC’s headquarters.
Prioritizing semiconductor workforce training

Prioritizing semiconductor workforce training

VCN - Vietnam is well-positioned to participate deeply in the global semiconductor industry. Experts believe that developing a skilled workforce in microchips and semiconductors should be a long-term priority to effectively capitalize on this opportunity.
Vietnam-Cambodia: Looking back on journey of cooperation

Vietnam-Cambodia: Looking back on journey of cooperation

VCN – The bilateral meeting between the General Department of Vietnam Customs (GDVC) and the General Department of Customs and Excise of Cambodia (GDCEC) was held by the GDVC on December 9.
Vietnam-China e-commerce: A perspective from Lang Son border

Vietnam-China e-commerce: A perspective from Lang Son border

VCN - Cross-border e-commerce is currently a hot topic among e-commerce businesses, particularly those actively developing digital platforms and cross-border electronic payment infrastructures through border gates in Lang Son province.

Latest News

SBV makes significant net withdrawal to stabilise exchange rate

SBV makes significant net withdrawal to stabilise exchange rate

Analysis shows it’s an intervention to manage system liquidity.
Việt Nam could maintain inflation between 3.5–4.5% in 2025: experts

Việt Nam could maintain inflation between 3.5–4.5% in 2025: experts

The forecasts were presented by experts at the scientific conference titled ’Market and Price Developments in Việt Nam in 2024 and Forecasts for 2025’ organised by the Institute of Economics and Finance and the Price Management Department on January 9 in Hà Nội.
Banking industry to focus on bad debt handling targets in 2025

Banking industry to focus on bad debt handling targets in 2025

The non-performing loan (NPL) ratio of the banking system (excluding NPLs of weak commercial banks) needs to be controlled at below 3 per cent by the end of 2025.
State Bank sets higher credit growth target for 2025

State Bank sets higher credit growth target for 2025

The credit growth target for the banking system in 2025 has been set higher than in 2024.

More News

Outlook for lending rates in 2025?

Outlook for lending rates in 2025?

VCN - The economy is forecast to continue to recover strongly from the end of 2024 to 2025, helping credit demand increase rapidly, but lending interest rates may also be under increasing pressure.
Tax policies drive strong economic recovery and growth

Tax policies drive strong economic recovery and growth

VCN - Far more than just a revenue-collection agency, the Tax Department has played a pivotal role in creating a transparent, equitable, and business-friendly environment. These efforts have not only contributed to macroeconomic stability but also fueled recovery and development for businesses, individuals, and households.
E-commerce tax collection estimated at VND 116 Trillion

E-commerce tax collection estimated at VND 116 Trillion

VCN - According to data from the General Department of Taxation, taxes declared and paid directly by foreign suppliers via the electronic portal in 2024 amounted to VND 8.687 trillion, equivalent to 126% of the previous year’s total and a 74% increase compared to current appropriation.
Big 4 banks estimate positive business results in 2024

Big 4 banks estimate positive business results in 2024

One of the country’s biggest banks expects results to be the best for four years.
Flexible and proactive when exchange rates still fluctuate in 2025

Flexible and proactive when exchange rates still fluctuate in 2025

VCN - In the last days of 2024, as many forecasts, the US Federal Reserve (Fed) continued to cut interest rates, pushing the USD index up, creating pressure on domestic exchange rates. Therefore, domestic exchange rate management policies need to continue to be flexible and appropriate, thereby supporting businesses in import and export.
Issuing government bonds has met the budget capital at reasonable costs

Issuing government bonds has met the budget capital at reasonable costs

VCN - According to the State Treasury's report, capital mobilization through the issuance of government bonds has ensured mobilization to meet the capital needs of the state budget at reasonable costs.
Bank stocks drive market gains as VN-Index closes final Friday of 2024 on a positive note

Bank stocks drive market gains as VN-Index closes final Friday of 2024 on a positive note

Việt Nam’s stock market ended the final Friday of 2024 on a positive note, with banking stocks leading the rally and VN-Index successfully surpassing the 1,275-point mark.
Banks still "struggling" to find tools for handling bad debt

Banks still "struggling" to find tools for handling bad debt

VCN - According to financial experts, the rising trend in bad debt continues to pose significant challenges to debt resolution and recovery efforts at credit institutions (CIs).
Forecast upbeat for banking industry in 2025

Forecast upbeat for banking industry in 2025

In a recent report, ACB Securities Companies analysts said that the net interest margin (NIM) of banks in 2025 will increase by five basis points over 2024.
Read More

Your care

Latest Most read
SBV makes significant net withdrawal to stabilise exchange rate

SBV makes significant net withdrawal to stabilise exchange rate

Analysis shows it’s an intervention to manage system liquidity.
Việt Nam could maintain inflation between 3.5–4.5% in 2025: experts

Việt Nam could maintain inflation between 3.5–4.5% in 2025: experts

The forecasts were presented by experts at the scientific conference titled ’Market and Price Developments in Việt Nam in 2024 and Forecasts for 2025’ organised by the Institute of Economics and Finance and the Price Management Department on January 9 in Hà Nội.
Banking industry to focus on bad debt handling targets in 2025

Banking industry to focus on bad debt handling targets in 2025

The non-performing loan (NPL) ratio of the banking system (excluding NPLs of weak commercial banks) needs to be controlled at below 3 per cent by the end of 2025.
State Bank sets higher credit growth target for 2025

State Bank sets higher credit growth target for 2025

The credit growth target for the banking system in 2025 has been set higher than in 2024.
Outlook for lending rates in 2025?

Outlook for lending rates in 2025?

VCN - According to the SBV, in managing interest rates in 2024, the SBV will continue to maintain the operating interest rates amid the global world interest rates remaining at high levels.
Mobile Version