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State budget revenues plunge

Update: July, 06/2012 - 10:38
Bags of cement being stacked by a worker at Viet Nam Cement Industry Corporation. The slowdown in the business sector, especially in the construction and building materials industries, is being blamed for a drop in tax revenues. — VNA/VNS Photo Tuan Anh
HA NOI _ State budget collections have fallen short of projections for the past five years, Deputy Minister of Finance Do Hoang Anh Tuan told a meeting in Ha Noi yesterday.

Revenues in the first six months of this year have totalled VND346 trillion (US$16.4 billion), or just 47 per cent of the target for the year and 1.7 per cent below collections for the same period last year, Tuan said.

He blamed the slow down in the business sector, especially in the cons-truction and building materials industries, for the drop in tax revenues.

Thousands close down

Official statistics have suggested that about 26,000 businesses ceased operations in the first half of the year, 9.5 per cent more than in the same period last year.

The stagnant real estate market has also affected sales, reducing collections from land use fees.

"In addition, some industries which have contributed substantially to the State budget, such as automobiles, motorbikes and electronics, have seen a remarkable drop-off in sales," Tuan said. "In big cities, the impact has been even more apparent."

Automobile sales alone have fallen by 60 per cent.

Crude oil revenues have continued to be the greatest source of State budget revenue, accounting for VND59 trillion ($2.8 billion). They reached 68 per cent of the year's target in the first six months.

During the period, petroleum exports fell by 21 per cent in terms of quantity and generated 13 per cent less in terms of State budget revenues.

The ministry has estimated that State spending during the first half of the year totalled VND413.8 trillion ($19.7 billion), or about 46 per cent of the target for the year, with capital investments in basic construction slowed.

Tuan said that the Government would try to meet State budget targets this year, without generating a deficit, but he admitted, "The goal will be double difficult to meet in these times."

Domestic tax revenues reached VND220 trillion ($10.4 billion), accounting for 44 per cent of the target.

Fuel prices

Tuan also used the meeting to address concerns over the recent Government move to deregulate fuel prices, giving petroleum distributors power to set their own prices.

He acknowledged that there was a monopoly in the sector. In most countries in the world, a single major petroleum distributor might hold a 12-per-cent market share, but in Viet Nam, the State-owned Petrolimex controls a 63-per-cent share of the market, substantial reducing competitiveness.

The ultimate power to set prices would therefore have to continue to reside with the State, since petroleum was a key factor in the economy.

Meanwhile, the ministry would require petroleum traders more fully disclose all information upon which pricing decisions are based, he said.

With Petrolimex also accused of trying to avoid about VND64 billion ($3 million) in new taxes when the ministry raised petrol import tariffs from 4 to 7 per cent on June 8, Tuan vowed that the ministry would investigate.

Meanwhile, Petrolimex has filed a tax declaration on a diesel shipment from the Middle East which was expected to arrive on June 17 upon which the old import tax rate of 3 per cent would continue to be applied. — VNS

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