State budget revenue and expenditure structure has been adjusted towards a sustainable direction

Mr. Tran Quang Chieu, Standing Member of the Finance and Budget Committee of the National Assembly.

In the 2016-2020 period, the state budget has made fundamental changes and achieved many remarkable results. As a permanent member of the Finance-Budget Committee of the National Assembly, how do you comment on the results of budget management over the past five years and especially 2020?

The fiscal policies in the 2016-2020 period have made progress, responded flexibly and coordinated more synchronously with the monetary policy, creating favorable conditions and promoting economic growth. In which, the state budget revenue - expenditure structure is adjusted towards a more sustainable direction. The government has promoted openness, budget transparency as well as community oversight.

In the past five years, the state budget revenue has been ensured to meet the major spending needs of the country, especially the need for large investment capital under the medium-term public investment plan.

In particular, in 2020, the socio-economic situation faced many difficulties due to the serious impacts of the Covid-19 pandemic, along with the impacts of climate change, natural disasters, storms and floods. That has affected almost all sectors and fields of our country's socio-economy and greatly affected the implementation of financial - state budget tasks.

Earning correctly, fully and nurturing a stable source of income are the regular tasks of the Finance sector in general and the Customs sector in particular. Photo: Hoang Tuan

However, the Government has directed while ministries, branches and localities have put in their best efforts; the business community and all classes of people have tried; while the whole political system has actively cooperated to implement many solutions to strengthen the management of revenue, distribution and use of the State budget closely, economically and effectively, ensuring resources to perform urgent tasks and making an important contribution to disease control, gradually restoring and developing socio-economic activities, ensuring people's lives, maintaining macroeconomic stability, as well as ensuring major balances of the economy.

That is evidenced by the fact that in 2020, with dual achievements, we will both successfully fight the pandemic and have the highest positive GDP growth in the region. Although GDP only reached about 45% of the plan, budget revenue still reached nearly 90% of the yearly estimate; social security is stable, and our credibility in the international arena has been improved.

I respect and appreciate the country's achievements in 2020 and think that it is the result of the efforts of the entire political system, including the significant contribution of the Finance sector.

In operating the state budget, one of the important goals set out is to adjust the budget revenue structure to be more sustainable, increase revenue from the production and business sector and create a premise for state budget revenue in the future. Looking at the revenue structure, do you think we have done that yet?

Indeed this is a rather difficult problem. How to both fundamentally and sustainably collect the budget and at the same time create conditions to support business development? Solving these factors is not easy.

Recently, the adjustment and renewal of revenue policies have faced many difficulties, the amendment of tax policies and the expansion of the tax base have not been as expected, so the results of state budget revenues have not been as planned.

The review and narrowing of the tax exemption and reduction categories, and the review of preferential policies affecting state budget revenues have not been implemented. There is still a situation of integrating many social policies in tax laws. This affects the sustainability of the budget.

Although the budget expenditure structure has improved, it must be seen that the task of paying salaries and social security policies is increasing, the socialization of investment is still slow, causing the rate of recurrent expenditure not to decline sharply.

Moreover, the adjustment of base salaries, pensions and preferential allowances for people with meritorious services has ensured an average increase of about 7% per year, but the increase in salary has not been coupled with downsizing payrolls and reducing spending for the public non-business sector.

In order to continue to ensure the sustainability of state budget revenue, in the future, the Finance sector should advise the Government on the implementation of the tax reform strategy.

Accordingly, it is necessary to focus on adjusting the collection policy to "ensure the neutrality of the tax policy", while expanding the revenue base and ensuring equality of all economic sectors in the tax policy, consistent with international regulations, ensuring reasonable mobilization for the State budget; increase revenue from production and business.

The Ministry of Finance shall study and formulate a complete collection-spending policy, and regulations on the decentralization of revenue sources among budget levels in the direction of ensuring the leading role of the central budget.

For the State budget estimate for 2021, the National Assembly passed a Resolution, which set the target of total state budget revenue of VND1,343.33 trillion, total state budget expenditure is VND1,687 trillion, State budget deficit is VND343.67 trillion. In the context that we cannot calculate the exact consequences of Covid-19, is the above indicator too difficult? What should the Government in general and the Finance sector in particular to achieve the plan?

The State budget estimate for 2021 submitted by the Government and approved by the National Assembly has been carefully calculated and based on assessments and predictions that are quite close to reality from the implementation of 2020 to the impacts of Covid-19 to socio-economic development. Therefore, if we actively implement these solutions, perhaps the aforementioned goal is not difficult to achieve.

In order to accomplish this difficult task, in the future, the Government, especially the finance sector, needs a very high determination to focus on a number of key solutions.

That is, it is necessary to soon amend and supplement revenue policies in general and tax laws, in particular, to ensure tax neutrality, expand the tax base, ensure the coverage of state budget revenues and stronger restrictions on tax law violations.

Along with that, in implementing organization, it is necessary to be more drastic in inspection and examination, and strongly handle transfer pricing; tax evasion, tax deferred tax, tax debt, tax arrears. Because if this target is not fulfilled, it will directly affect other macro financial indicators such as budget deficit, public debt, government debt, and the annual debt repayment obligation on the gross domestic revenue, that these macro indicators are directly related to national financial security and safety.