Minister of Finance Dinh Tien Dung: Increase recurrent expenditure savings to ensure budget balance in the context of the Covid-19 pandemic

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Minister Dinh Tien Dung gave an interview.

Up to now, the Covid-19 pandemic has caused many negative impacts on production and business activities. This will certainly affect the tax payment obligations of people and businesses. How did the Ministry of Finance provide tax support to these subjects?

The fiscal policy is both about solving urgent problems in the short term and in the long term, creating favourable conditions for the environment of business investment and production development. Therefore, the Ministry of Finance advised the Government and competent authorities on both policies to issue immediately as well as long-term policies to remove difficulties for people and businesses and develop production and business

Specifically, the ministry has submitted to the Government for promulgation Decree No. 41/2020/ND-CP on extending payment of taxes and land rents to people affected by Covid-19 pandemic. Accordingly, the deadline for tax payment of five months for value added tax and corporate income tax of enterprises and production and business organisations will be extended; five months extension for value added tax and personal income tax of business households; at the same time, extend five months for land rent of businesses, organisations and individuals.

According to this decree, about 740 thousand businesses, accounting for 98% of operating enterprises, will benefit from the policy. In our opinion, this policy will be extended by about VND 180 trillion.

Secondly, we have submitted to the Government and settled under the authority of import duty exemption for medical equipment for pandemic prevention.

Thirdly, submit to the Government amendments to Decree No. 122/2016/ND-CP, Decree No. 125/2017/ND-CP and Decree No. 134/2016/ND-CP on import tax rates to remove difficulties for businesses operating in footwear, textiles, agro-forestry and aquatic product processing, mechanics, agriculture, ancillary industries and automotive industry.

It is expected that when these decrees are issued, the impact on reducing budget revenue as well as increasing the ability of return on investment for businesses is about VND 6,000 billion.

Fourth, we submitted to the Government to propose to the National Assembly at the next meeting on deciding the level of implementation of corporate income tax policy for small and micro enterprises, applied from July 1. If this policy is adopted, about 700,000 businesses, accounting for about 93% of the total number of operating businesses in the country, will benefit. Thereby, these businesses will have the obligation to pay the budget in 2020 reduced by about VND 7.8 trillion.

Fifth, we submit to the Government to ask the Standing Committee of the National Assembly for an increase in family allowances for personal income tax. If this policy is adopted, total income of employees will be retained to increase spending by this adjustment in 2020 of about VND 10.3 trillion.

Besides the tax, the Ministry of Finance is planning to exempt and cut many fees and charges to support businesses. Could you share more details about this?

We have worked with industries to review the reduction and exemption of many types of fees and charges. Specifically, the exemption of license fees for cooperatives and unions of cooperatives operating in agriculture and enterprises, households and individuals newly established in the first year, branches, business locations, representative offices established by small and medium-sized enterprises when small and medium-sized enterprises are exempt from licensing fees; reducing 70% of enterprise registration fee; 67% reduction of business information publication fee and 50-70% reduction of fees for evaluation and amendments to postal operation licenses.

The total fees and charges cut that businesses and people benefit is about VND 500 billion.

At the same time, in recent years, we have issued a circular adjusting price from 10-50% for nine service groups and completely exempting for six service groups in securities, applicable at Vietnamese stock exchanges and securities depository centres. This policy has had a very good impact on Vietnam's stock market.

In the context of pandemics, the prevention and control of pandemics, the organisation of isolation places, etc. all require budget. How does this affect the balance of the State budget, minister?

Over the past time, we, together with other sectors, report to the Government and the National Assembly Standing Committee to devote adequate resources to the prevention of the Covid-19 pandemic. Specifically, VND 16.2 trillion has been spent to prevent and combat the pandemic, of which about VND 9.5 trillion is from central and local budgets for medical equipment procurement.

Expectedly, in the coming time, the expenditures on prevention and control will continue to increase to enhance the ability to cope with this pandemic.

For example, we spent VND 6.7 trillion for the priority regime of allowances for the people involved in the prevention of the Covid-19 pandemic, including food for isolated people, for medical examination and treatment during the time of isolation.

We have reported to the Government, here, we report to the Standing Committee of the National Assembly to spend VND 36 trillion from the budget to implement the Government's resolution for cash support for six groups of subjects that have been deeply reduced from income, losing their jobs, being underemployed, facing difficulties, failing to ensure a minimum life, being affected by Covid-19 pandemic, providing additional support for a number of people enjoying preferential social protection policies.

Normally, immediately after the National Assembly's Resolution and Prime Minister's Decision on the annual State budget estimation plan, the Ministry of Finance develops scripts to run.

This year, before the Covid-19 pandemic happened so fast and so complicated on a large scale, from time to time, we have built many budget operating scenarios.

For example, at the end of February, we developed a budget management scenario based on the Ministry of Planning and Investment's assessment of economic growth of about 5.96-6.25%. The plan is 6.8% and the budget balance also follows the growth of 6.8%.

However, when the economy was in decline, the Ministry of Planning and Investment's assessment gave a lower growth target of 5.96-6.25%, we built a scenario based on this growth.

Up to now, the Ministry of Planning and Investment continues to propose a growth scenario of about 5.3%, along with other impacts such as falling oil prices compared to estimates.

In the calculation plan, the price of crude oil is 60 USD/barrel, but recently, sometimes it was 20-25 USD/barrel. We continue to update this information, along with forecasts of international organisations such as IMF, WB, and ADB to continue building the budget scenario according to the current situation.

To date, with the crude oil price of about 35 USD/barrel - a deep decline compared to our estimates, economic growth is about 5.3%. Another difficulty is that revenue from equitisation and divestment of State-owned enterprises this year according to the National Assembly's estimate of VND 45 trillion is currently facing many difficulties.

We have updated these factors to build a budget scenario. The reduction of budget revenue may be about VND 150 trillion, of which the central budget decreases by VND 110 trillion and local budget decreases by about VND 40 trillion.

If the GDP growth rate is lower, we will continue to update and evaluate.

With the ability to reduce budget revenue so clearly, what has the finance sector been doing to ensure the budget balance as planned, minister?

In the immediate future, we have petitioned the Government to require ministries, branches and localities to increase regular expenditure savings. Firstly, in addition to a 10% reduction in recurrent expenditures according to estimates approved by the National Assembly, another 10% reduction as well as an additional 50% savings on foreign travel expenses and 30% of conference and seminar funding. With this amount, the central agency alone has saved about VND 700 trillion.

In the spirit of sharing responsibilities between central and local governments, in the prevention and control funding allocated to localities, localities with high budget balancing capability must be proactive. For localities with less than 50% of central budget, the central supports; and in difficult localities, the central budget will provide support at 30%, 50% and 70%.

In the use of contingency sources, expenditure savings must be absolutely economical to ensure immediate service of pandemic prevention and control as well as for prevention of natural disasters, droughts and saltwater intrusion in the Mekong Delta and natural disasters in the northern mountainous region...