Budget revenue will decrease by 25,000 billion VND if the 2% VAT reduction is extended.

On the afternoon of November 20, the National Assembly discussed in the hall about reducing value added tax (VAT).

Presenting the Government's proposal on VAT reduction, Minister of Finance Ho Duc Phoc stated that after 4 months of implementation (July, August, September and October 2023), the VAT reduction policy under Resolution No. 101/2023 has supported businesses and people with a total of about 15,600 billion VND.

This has contributed to reducing the cost of goods and services, thereby promoting production and business and creating more jobs for workers, contributing to stimulating consumer demand and promoting production and business development.

Minister Ho Duc Phoc stated that in order to promptly respond to developments in the socio -economic situation, while considering and calculating appropriately to actual conditions, it is necessary to resolutely and effectively implement support solutions on taxes, fees, charges and land rents issued in 2023 and study and propose a number of solutions to reduce taxes, fees and charges for 2024.

Accordingly, continue to consider reducing VAT by 2% and consider reducing environmental protection tax on gasoline and oil as applied in 2023; continue to review and reduce export tax and import tax rates to support domestic production and business; reduce collection of some fees and charges.

Based on the assessment of the results achieved by the 2% VAT reduction solution according to Resolution No. 101/2023, it is necessary to continue implementing VAT reduction in the first 6 months of 2024 to support businesses and people.

Finance - Banking - Budget revenue will decrease by 25,000 billion VND if the 2% VAT reduction is extended — Minister of Finance Ho Duc Phoc presented the report (Photo: Quochoi.vn).

According to Mr. Phoc, implementing this plan aims to stimulate consumption, in line with the current economic context, thereby contributing to promoting production and business activities to recover and develop soon to contribute back to the state budget as well as the economy.

At the same time, to ensure policy flexibility, thereby creating conditions for businesses and people to soon enjoy support policies, the Government proposes: "After June 30, 2024, between the two sessions of the National Assembly, based on the Government's proposal, the National Assembly Standing Committee shall consider and decide to apply value-added tax reduction if the economic situation and businesses and people are still facing difficulties, and report to the National Assembly at the nearest session".

Also according to the Government's report, the expected reduction in state budget revenue is about 4,175 billion/month, if applied in the first 6 months of 2024, it is equivalent to about 25,000 billion VND.

Specifically, based on the reduction in domestic state budget revenue calculated for the period from July 1, 2023 to December 31, 2023, the average monthly reduction is about VND 2,550 billion.

Assuming GDP growth in 2024 is about 6-6.5%, the growth rate of State budget revenue in 2024 is about 5-7%, the average monthly decrease in domestic revenue in 2024 is expected to be 2,700 billion VND (equal to 2,550 x 106%), the average monthly decrease in import revenue is about 1,475 billion VND).

Regarding the impact on economic growth, the Minister said that reducing VAT will contribute to reducing costs and selling prices of goods and services, thereby contributing to promoting production and business and maintaining jobs for workers, contributing to stabilizing the macro economy and economic recovery in 2024.

For the people, this is the group that will directly benefit from this policy. Reducing VAT on goods and services subject to a VAT rate of 10% will contribute to reducing selling prices, thereby directly reducing people's costs in consuming goods and services serving people's lives.

For businesses, a 2% reduction in VAT will help reduce production costs and product prices, thereby helping businesses increase their competitiveness, increase consumption of goods and services, and expand production and business .

Source