Mr. Tran Quang Chieu, Permanent Secretary of the National Assembly's Financial and Budget Committee: Using the CPI as a basis to adjust the family all

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What do you think about the proposal to adjust the personal income tax deduction of the Ministry of Finance, sir?

I fully support this proposal bythe Ministry of Finance. This is necessary because the consumer price index (CPI) has increased by 23% compared to 2013. This family reduction will still be higher than GDP per capita, regional minimum wage, average income and social spending for the current year as well as some years later.

Many people think that the adjustment of family allowances should rely on many other factors, instead of just using CPI to ensure accuracy and fairness. What is your opinion?

The proposed adjustment based on the CPI of the Ministry of Finance is perfectly reasonable with the current law. Because this amendment of family allowances is based on the provisions of Clause 4, Article 1 of Law No. 26/2012/QH13. The law stipulates that the Ministry of Finance's use of the consumer price index CPI as a basis for adjusting family allowances is in accordance with the Law.

With other criteria such as: GDP per capita, regional minimum wage, income and average social spending. The Ministry of Finance should study and consult when amending regulations on deduction in the Law on Personal Income Tax later.

Is the adjustment of family allowances when the CPI has increased to 23% of the Ministry of Finance is considered to be delayed?

The law stipulates that only when fluctuations in CPI are over 20% or more, it is necessary to adjust the family circumstance-based reduction, not the specific regulation that is 20%.

According to data from the General Statistics Office, the CPI from the effective date of Law No. 26 (July 1, 2013) by the end of June 2019 increased by 18.17%; by the end of September 2019, it will increase by 19.65%; by the end of December 2019, an increase of 23.2%.

Looking at the fluctuations of such CPI, it is reasonable to wait until the end of 2019 for the Ministry of Finance to calculate the adjustment. It is impossible regardless of the time when the price fluctuation of up to 20% is to start fixing immediately, but still have to wait until the end of the year and the end of the tax period. This will ensure both policy stability as well as cost savings for taxpayers and tax authorities.

Immediately after the proposal of the Ministry of Finance was issued, besides the supportive opinions, there was still an opinion that the reduction level of VND 11 million/month was quite low? What is your opinion on this issue?

In fact, with every tax related issue, there are always mixed opinions. Each proposal will inevitably encounter opposition. With this proposal of the Ministry of Finance, I think that the opponents are those who have a good income or higher. Therefore, whether raised to VND 15 million or VND 18 million, certainly those people with that income level or more will still complain. This is unavoidable.

With the provision to increase the reduction for the taxpayer itself to VND 11 million /month as proposed by the Ministry of Finance, the ordinary workers and civil servants will not be affected much.

Personal Income Tax can be calculated as tax on income. In many countries around the world, people have to pay taxes for every income. One penny also has to pay taxes. Of course, it will calculate which cases are exempted and what percentage are exempted.

And in Vietnam, the nature of its Personal Income Tax implies that it is "hitting" high-income people, that is, only those with average or higher income are taxable. Low- and middle-income people are not actually affected by the Personal Income Tax Law.

Consumer price index by the end of December 2019 increased by 23.2%. Source: Internet.

According to calculations by the Ministry of Finance, with the above proposal to increase the family allowances deduction, the revenue from the personal income tax will be reduced by about VND 10,300 billion/ year (equivalent to about 13% of the revenue from the Personal Income Tax in 2019). Are you concerned about the state budget revenue structure in 2020?

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I think this should not be a problem because the figure given by the Ministry of Finance is based on current taxpayers with their income at the current age and at the rates set out in the current Law. But in fact, wages of workers are increasing each year. Along with that, many people have higher incomes due to socio-economic development. Therefore, there is no need to worry about the budget deficit in the future.

Thank you, Sir!