Finance Minister Dinh Tien Dung (Source: VNA) Hanoi (VNS/VNA) - State budget revenues falling short of the half-waymark in the first six months of the year is a normal feature of the domesticeconomy and does not preclude meeting the annual target, Finance Minister Dinh TienDung tells Vietnam News.
Q: In the first half this year, the total State budget collection met just 46.5percent of the annual target. How do you assess this result? Does thismake the target set by the National Assembly (NA) for 2017 difficult to reach?
A: This has to be put in perspective. Budget revenues for the first six
months present an increase of nearly 13 percent over the same period in 2016,even though it fulfills only 46.5 percent of the annual target.
Domestic collection rose 12.4 percent year-on-year, or 45.5 percent of theannual plan. If we take out land use taxes, income from lottery sales, revenuesfrom selling the State’s stake in enterprises, dividend revenues and profitsafter tax, domestic revenues rose by more than 10.5 percent, which is basicallyin line with the economic growth rate of 5.73 percent as well as the inflationrate of 4.15 percent in the first six months.
A majority of the localities, 54 of 63, have done well in budget collection,including Hanoi, HCM City, Quang Ninh, Hai Phong and Quang Ngai.
We should also keep in mind that budget revenues in the first six months of theyear usually falls short of 50 percent of the annual target as localities focuson boosting production in the last months of the year, which is a distinctivefeature of our economy. Therefore, with the budget revenue results achieved inH1, we believe that the finance sector will fulfill and even exceed budgetcollection goals set by the National Assembly, which are expected to riseyear-on-year by five to eight percent.
However, it cannot be denied that the economy still faces many trickychallenges, especially hardships in production and business. Therefore, fromnow until the end of the year, the financial sector will have to work hard andadopt drastic measures to ensure security and sustainability.
Q: It has been seen in recent years that local budget collection surpassestargets while the central budget collection fails to meet them. Will thissituation be repeated this year?
A: At the second session of the National Assembly, we reported that centralbudget revenue would fall short of the target by 8-12 trillion VND last year,but in the end, the shortfall was just 321 billion VND.
Local budget revenue was expected to surpass the target by 36 trillion VND, butit went up by 82 trillion VND, eventually.
In the first half of this year, while central budget revenue met 41.5 percentof the annual plan, local revenues trumped it by four percent.
The financial sector will take this into account, make careful calculations andtake drastic measures to ensure a balanced State budget.
Q: Could you elaborate on some of the measures?
A: The sector has actively carried out several solutions in tandem to preventlosses and avert a budget deficit, including increasing inspections,strengthening supervision and auditing to prevent tax evasion, reduce taxarrears and detect and prevent transfer pricing. In 2016, tax authoritiesinspected over 84,500 enterprises, reducing State Budget losses by nearly 17.2trillion VND and recovering 42.5 trillion VND in arrears, an increase of nearly39 percent and 13.2 percent over 2015. This, in turn, reduced tax arrears atthe end of 2016 to 74.1 trillion VND, down 3 percent over 2015.
Q: Apart from strengthening inspections, auditing, etc., what are othermeasures that the sector envisages as it tries to ensure a balanced State budgetin the long term?
Firstly, the finance sector will continue to perfect the financial andbudgetary system to progressively restructure the State budget and keep publicdebt under control.
Specifically, in the second half of 2017 and early 2018, the Ministry ofFinance will submit to the Government and the National Assembly changes in theenvironmental protection tax; amendments and supplements to some provisions ofthe laws on corporate tax, individual tax, value-added tax, national-resourcetax and tax management. These changes are very important for restructuring theState budget in the context of low global oil prices and deeper internationalintegration, which has resulted in reduced tariffs and lower revenues fromimport-export activities.
Secondly, we will continue our fiscal tightening policy, exercise thrift andreview State budget expenditures to reduce overspending. We will alsoaccelerate reform of the nation’s financial system towards greater efficiency,and allocate more funds for infrastructure development.
Thirdly, we will reform the financial management system in the areas oftaxation, customs, treasury, including the application of information technology.
Fourthly, we will continue to find solutions to reduce costs for businesses. Inparticular, we will review documents relating to business tax contributions,social insurance, health insurance, unemployment insurance and all otherexpenses that they are responsible for. This will help reduce corporatespending and create favourable conditions for businesses to develop, promoteproduction and business, which is a long-term strategy for ensuring stable,sustainable revenue sources for the State budget.
Q: What are some of the specific objectives that the finance sector has set forthe future?
A: The sector will strive to successfully complete some specific objectives by2020. Average state budget mobilisation for the 2016-2020 period is estimatedat about 20-21 percent of GDP, and total budget revenue for the period isforecast at 1.65 times that of the 2011-2015 period.
Domestic collection is expected to account for 84-85 percent of State budgetincome, with 14-16 percent coming from crude oil export and other import-exportactivities.
Meanwhile, central budget revenues are set to reach 60-65 percent of totalbudget collection. The sector will also reduce State budget overspending, notexceeding 3.5 percent of GDP by 2020.
At the same time, public debt for the 2016-2020 period will be reined in at amaximum of 65 percent of the GDP, while Government debt and national foreigndebt will not exceed 55 percent and 50 percent of GDP respectively.-VNA
VNA
