Wednesday, August 15 2018


New fines, taxes to raise revenue?

Update: March, 07/2013 - 04:00

by Ngo Thu Phuong

Maybe it's a coincidence, maybe it's not, but a series of proposals has been outlined over the last week with one thing in common – raising more money from the public.

To start with, motorcyclists who are caught wearing fake helmets will be hit with a fine of VND100,000-200,000 (US$4-8) under the Transport Ministry's draft decree on penalties for road and railway violations. Those found to be using vehicles belonging to someone else would be subject to similar fines.

HCM City's Real Estate Association has also proposed that the Government impose a tax on income from savings upwards of VND500 million ($24,000).

The proponents of these new laws argue they are in the public interest and not just sources of new revenue. Fake helmets of low quality result in people suffering worse traffic accident injuries than they would otherwise do so if wearing authentic helmets. Official figures reveal that 70 per cent of helmets in use in Viet Nam are fake ones.

Authorities often find it difficult to track down the registered owners of vehicles involved in incidents, which is the stated rationale behind the proposal to improve the management of vehicle ownership.

Taxing interest on savings is designed to shift money from the banking sector to property, production and trade industries, which have been stagnant due to downturn in their respective economic markets.

So, given all the positives associated with the proposed laws, why have many been so quick to criticise them as unreasonable, impractical or just plain mean?

Wearing fake helmets isn't the fault of bikers, they say. People, especially those on low incomes, find it difficult to turn down the cheap prices of fake helmets, which are sold everywhere in every city. And the sellers themselves are just trying to make a living. It is the manufacturers of the fake helmets who deserve to be fined heavily.

There are more than 35 million motorbikes and nearly 2 million cars nationwide, many of which are not registered in their current owners' names. As a result, it is surely impractical to effectively fine those using other people's vehicles given that the authorities do not have the resources to control this widespread issue.

In the third case, the public is unlikely to be enticed into transferring their savings to a frozen real estate market, as was mooted by the body representing property companies in the nation's biggest city.

It might be argued that the fines are not high for each offence and the savings tax targets the well off, with few salaried workers or pensioners having over VND500 million in the bank. But why should the common people have to bear any more charges given their financial burden from various existing fees, fines and taxes?

A report produced by the National Assembly's Economic Committee in 2012 showed that Viet Nam has one of the highest levels of tax and fee collection in the region. The State's revenue from taxes and fees for 2007-11 accounted for 26.3 per cent of Gross Domestic Product, while the equivalent figures in India, Thailand and China were between 8 and 17 per cent.

Violations should be punished and problems should be fixed. But, the violations and problems addressed here all stem from weakness in management of authorised bodies.

Had officials taken the production and sale of fake helmets more seriously five years ago, when the wearing of motorbike helmets became compulsory, would people even be able to buy one now?

The police should have clamped down on vehicle ownership irregularities when they discovered the problem many years back.

And if the financial and real estate markets were better regulated, there wouldn't be such desperate need for new sources of stimulus.

It is completely unfair to impose fines and taxes on normal people who are only accidental violators of laws or merely fortunate enough to have some money saved. The roots of the issues need to be addressed, instead of relying on fines, which are ineffective if enforcement remains poor.

The proposals are not in place yet, so let's pray that they will not be rubber-stamped soon. — VNS

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