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| Hopes dim for personal' income tax breaks in H2 |
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20-JUN-2009 Intellasia | The Saigon Times Daily Page 1 |
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20 Jun, 2009 - 7:00:00 AM |
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The government's call for more personal income tax reductions in the second half of the year as part of a broader plan to stimulate the economy is seen coming to naught due to lack of support in the National Assembly Standing Committee.
A draft resolution which the committee yesterday handed out to National Assembly deputies who are meeting in Hanoi in preparation for a vote on Friday does not mention the tax reductions proposed by the government.
The committee backs the government-suggested exemption of personal income tax in the first half of the year, of which the collection the government has suspended as part of its economic stimulus programme.
In rapid response to the global recession, the government put off the collection of the tax from January to May to prop up consumer demand and this plan was recently extended to end-June. In a recent proposal, the Ministry of Finance wants a monthly tax exemption of 200,000 in the last six months of the year.
But the committee's draft resolution does not include this proposed exemption, meaning that no more tax breaks might be offered following the across-the-board exemptions in the first half.
The government earlier proposed income tax. Exemptions for capital investments and transfers, including stock investments, until end-2010 to give a much-needed lifeline to the stock market which was then performing poorly.
The draft resolution, however, indicates stock investors and those involved in capital investments and transfers could have.to pay the tax from early next year.
The proposed personal income tax breaks lack National Assembly support from the beginning because of concern about the limited benefits for the poor.
According to Phung Quoc Hien, chair of the National Assembly Finance and Budget Committee, any tax reductions will primarily benefit high-income members of society while the government proposal says they are targeted at low-income people.
The tax should be collected in the second half of the year, he said at the ongoing National Assembly session in Hanoi.
But Dr Nguyen Quang A has shown backing for the tax breaks, especially for about two million family- run businesses that are subject to personal income tax. These businesses will generate revenue and employment for society, he said.
He said he agreed with the Finance and Budget Committee's position on the imposition of the tax on around 300,000 high- income people in the country. But he implied tax reductions for these people who pay hundreds of billions of-dong a year would have a wider positive impact on the economy.
An economist, who declined to be named, said the personal income tax exemptions and reductions should be continued because the economy had yet to get out of difficulties due to poor export performance and low domestic consumer demand.
The tax breaks will have a psychologically positive impact on individuals and family-run businesses, the economist said, adding high-income people with tax exemptions or reductions would increase spending, thus fuelling domestic production and job generation.
For the tax on stock and property investors,- Nguyen Quang A and the economist had the same view that the tax should be collected as their operations will not have a direct positive effect on local production.
The draft resolution of the Finance and Budget Committee also shows the National Assembly Standing Committee's backing of a budget deficit of 7 percent, instead the government-proposed 8 percent, inflation of about 10 percent, GDP growth of 5 percent and export growth of3 percent.
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