National Assembly Delegate: VAT should be reduced on all goods to stimulate demand

According to delegates, the 2% VAT reduction should be applied to all goods to stimulate demand, and should be extended for one year instead of six months to maximize effectiveness.

The government is submitting to the National Assembly a proposal to reduce VAT by 2% on goods and services subject to a 10% tax rate, except for certain sectors such as banking, real estate, securities, and telecommunications. This policy is being introduced in the context of Vietnam facing a sharp decline in aggregate demand.

Sharing on the sidelines of the National Assembly on the morning of May 27, many delegates said that this tax reduction policy should be relaxed for all goods and services in the current difficult context.

"It is necessary to reduce VAT by 2% on all goods," said Mr. Vu Tien Loc, Chairman of the Vietnam Arbitration Center. According to him, every business opportunity is valuable, and while businesses are facing difficulties, this tax reduction will stimulate demand and solve market difficulties - the biggest bottleneck for businesses at the moment.

Mr. Vu Tien Loc, Chairman of Vietnam Arbitration Center. Photo: Hoang Phong

Chairman of the Association of Small and Medium Enterprises Nguyen Van Than agreed with the expansion of fields and industries benefiting from this policy to stimulate consumption.

"Opening more fields requires the Government to review and propose to the National Assembly, but in my opinion, we should focus on the production and export sectors which are currently facing many difficulties," he said.

Reducing VAT by 2% will have an immediate impact on people, stimulating consumption as they save on living expenses, helping to stimulate demand in the context of weak purchasing power. Manufacturing enterprises will also benefit indirectly when consumption of goods and services increases and input fuel costs are reduced because these items are only subject to 8% tax.

Mr. Tran Hoang Ngan said that in this context, fiscal policy needs to be expanded to help the economy escape recession and solve social security and employment problems.

According to him, all industries and fields are connected to each other. The financial market is an important market that contributes to solving the capital problem for businesses. "Whatever is easy and convenient should be done. Therefore, it is necessary to reduce VAT for the general public, not just in certain areas, and it is even possible to reduce this tax more deeply," Mr. Ngan stated his opinion.

Previously, according to the audit report of the Finance and Budget Committee, some opinions at this agency suggested considering reducing VAT on all groups of goods currently subject to a tax rate of 10%, because all production and business sectors are currently facing difficulties. However, Mr. Hoang Van Cuong, Vice President of the National Economics University, said that taxes should only be reduced on sectors and groups of production goods that are experiencing sharp declines and losing markets and orders.

"Good and profitable sectors such as banking should not be reduced to ensure fair policies," Mr. Hoang Van Cuong shared.

Mr. Hoang Van Cuong, Vice President of National Economics University. Photo: Hoang Phong

Presented to the National Assembly this time, the Government also plans to reduce VAT to 8% for 6 months , until the end of 2023. Expressing their views, National Assembly deputies all want to extend the application period of this policy by one year, until 2024.

According to Mr. Vu Tien Loc, this extension is to avoid policy jerkiness. Similarly, Vice President of the National Economics University Hoang Van Cuong also acknowledged that extending tax reduction to 2024 will provide enough support for businesses.

"We expect the economy to recover by the end of 2023, but whether the situation has improved by then is uncertain, so we need to extend this policy to next year to be effective," he said.

However, according to current regulations, December 31 is the time to finalize taxes and develop the next year's budget plan. In order to avoid any interruption in extending this policy, Mr. Cuong said that the resolution of the National Assembly this time should have an open provision. That is, allowing the Government to reduce taxes until the end of 2023, and if the Government finds it necessary to continue to extend, it will report to the National Assembly Standing Committee for decision, without having to wait until the next session.

The National Assembly is expected to discuss this tax reduction in parliament on June 1 and vote to approve it at the end of the session.

Mr. Minh

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