Balancing fiscal policies: Nurturing revenue sources for sustainable development

May 30, 2024 - 08:27
Minister of Finance Hồ Đức Phớc shared insights with the press regarding budget revenue, fiscal policies and financial market issues.
Minister of Finance Hồ Đức Phớc. — VNA/VNS Photo

While fiscal policies and tax incentives aimed at 'nurturing revenue sources' are essential, it is also critical to focus on improving legal regulations, unlocking resources and overcoming challenges related to capital and markets. These actions are key for business growth and sustainable development.

Minister of Finance Hồ Đức Phớc recently shared insights with the press regarding budget revenue, fiscal policies and financial market issues.

According to estimates, the state budget revenue for the first four months is on track. However, economic conditions both domestically and internationally remain uncertain. How does this uncertainty affect the budget and the ministry? What solutions does the ministry have to boost revenue?

In 2024, despite numerous economic challenges, Việt Nam's government exhibited remarkable determination and effort, resulting in impressive fiscal achievements.

In the first four months of the year, the State budget was estimated at VNĐ733.4 trillion (US$28.8 billion), accounting for 43.1 per cent of the annual estimate and marking a 10.1 per cent increase compared to the same period last year. The central budget was about 46.5 per cent of the estimate, while local budget revenue was around 39.7 per cent of the estimate.

State budget revenue is closely tied to economic growth. Strong revenue indicates a healthy economy and business sector, while low growth affects budget revenue. However, the financial sector works hard to "nurture revenue sources" and "tap into the people's strength" to ensure all required revenues are collected.

Each year, the Government offers tax cuts and land rent exemptions totalling around VNĐ200 trillion. Despite these reductions, the budget remains on track and meets its targets. This highlights the Government's flexible fiscal policy, allowing for increased spending on construction, infrastructure, and post-COVID-19 economic recovery.

Under pressure to meet budget collection goals set by the Government, the finance sector has introduced various initiatives like electronic invoices, tax data centres and a cross-border electronic portal. They have also implemented measures for real estate business and transfer taxes, helping individuals and businesses declare accurate property transfer prices, improving management efficiency and ensuring budget revenue.

I think success in financial tasks requires creativity, flexibility and effort from the financial sector, all government levels, localities and the determination of people and businesses.

Recently, tax and fee relief policies have greatly helped people and businesses. How will the ministry continue these efforts?

Throughout the majority of the previous term, the nation has navigated numerous challenges and is poised to embark on a new phase of development. This achievement owes much to effective budget management and the implementation of fiscal policies.

During economic hardships for enterprises in the pandemic, the Government remained steadfast in its goals of stabilising macroeconomic conditions, controlling inflation, fostering growth and ensuring a healthy balance.

Expanding fiscal policies by exempting, reducing and extending taxes and fees, including land rent and land use fees, aims to support people and businesses with a budget of approximately VNĐ700 trillion. Looking ahead, the government plans to extend the 2 per cent reduction in value-added tax as per Resolution No. 110/2023/QH15, applying to specific goods and services with a 10 per cent value-added tax rate for the last six months of the year.

A representative of a company pays taxes at a tax authority in HCM City. — VNA/VNS Photo

Currently, the Ministry of Finance has submitted a report to the Prime Minister, seeking permission to draft a decree extending the deadline for paying value-added tax, corporate income tax, personal income tax and land rent in 2024. Additionally, the decree will extend the deadline for paying special consumption tax on domestically produced or assembled cars, streamlining the process to expedite implementation.

International organisations forecast Việt Nam's economic growth in 2024 to range between 5-6 per cent, these projections fall short of the National Assembly's target. Thus, alongside tax and fee adjustments, comprehensive solutions are necessary. These include improving the business environment, streamlining procedures, providing capital and interest rate support, addressing economic challenges, and prioritising public investment, real estate market development, production, business and exports.

These measures require significant focus and action.

The Ministry of Finance is currently crafting strategies to advise the Government and the National Assembly on effective state finance management.

We see tax support as crucial for nurturing revenue and empowering individuals. However, it's equally vital to focus on refining regulations and policies, unlocking resources, and addressing capital and market challenges. These efforts are essential for sustainable business development and long-term growth.

To ensure the flow of capital into the economy via the financial market, what strategies does the ministry plan to implement to enhance stability and sustainability in the future?

Despite significant impacts from domestic and international economic fluctuations, including in the stock market, government bonds, corporate bonds and insurance markets, these sectors are stabilising and showing signs of recovery. With strong oversight from the National Assembly and government and concerted efforts from management agencies, financial markets are steadily improving.

Việt Nam's stock market operates smoothly with increased transparency and liquidity. Efforts to update the legal framework are underway to enhance market quality, and regulatory agencies are actively working to strengthen oversight.

The corporate bond market shows positive signs following the effective implementation of Decree 08/2023/NĐ-CP, supported by government measures. Both primary and secondary bond markets are gaining confidence with improved transparency and liquidity.

While the insurance market, particularly life insurance, still faces challenges, it has seen organisational improvements and increased transparency through regulatory efforts.

Moving forward, the Ministry of Finance will continue close collaboration with relevant ministries to promote transparent, healthy, and sustainable financial market development, emphasising strong business activities and contributing to the nation's economy. — VNS