Personal income tax is time to get rid of the "old shirt"

Since July 2020, the family deduction has remained at VND 11 million/month for the taxpayer himself and VND 4.4 million/month for each dependent. During that time, the price level has fluctuated sharply, the cost of living has increased rapidly every year, while the salary of workers has not increased accordingly. Many salaried workers are currently struggling to make ends meet, but are still classified as having to pay personal income tax.

Tax officers from 7 Dak Lak provinces guide people to declare personal income tax. Photo: Viet An

This fact shows one thing clearly: the current tax policy is "slow" compared to life. Without timely adjustments, the tax system will tax even the minimum income - the part that should be reserved for essential needs such as food, housing, child care, medical treatment, and minimum savings. At that time, taxes will become a burden.

The current calculation of family deductions is still based on the consumer price index (CPI), with the regulation that if the CPI increases by more than 20% compared to the most recent adjustment, then the deduction level will be considered to be increased. This is a technical regulation but leads to a large delay in policy. People's lives cannot wait for the CPI to "reach the threshold" before receiving tax reductions. If not updated promptly, tax policy will fall behind, losing its role in reasonable regulation and burden sharing.

Not only is the family deduction outdated, but the current progressive tax schedule with 7 tax brackets, the highest of which is 35%, is also showing many shortcomings. The gap between tax brackets is too close, causing workers to have to pay higher taxes for just a small increase in income, which does not reflect their actual ability to pay.

Technical backwardness, combined with an inflexible adjustment mechanism, is causing personal income tax to no longer be a revenue-generating policy, but to become an invisible force that reduces people's disposable income - especially the group of salaried workers with stable and transparent income.

People do not oppose tax obligations. What they expect is a reasonable policy that accurately reflects the cost of living, the level of contribution and the actual situation. The amendment of the Personal Income Tax Law should not be just a “technical adjustment”, but a comprehensive reform with a new mindset: taking people’s actual lives as the basis, instead of relying only on macro indicators.

The Ministry of Finance is currently rushing to complete the draft Law on Personal Income Tax (amended) to submit to the National Assembly in the upcoming October session. This is an important opportunity to renew policies, overcome technical loopholes, update new economic factors and, most importantly, erase the feeling of “unfairness” that has been simmering in the minds of taxpayers for a long time.

While waiting for the new law to be passed and applied, issuing a separate resolution on raising the family deduction level - as planned by the National Assembly Standing Committee - is absolutely necessary and urgent to immediately resolve current shortcomings.

Raising the family deduction level appropriately not only has social security significance but also is a “boost” for the whole economy. Adjusting taxes appropriately, flexibly and in line with reality will not only help reduce the immediate burden on workers, but in the long term, it will also encourage workers to increase spending, help businesses develop and nurture a sustainable source of revenue for the State.

After nearly two decades, it is time for personal income tax policy to take off its "old coat" and put on a new look - more flexible and practical.

Source: https://baodaklak.vn/kinh-te/202508/thue-thu-nhap-ca-nhan-da-den-luc-thoat-chiec-ao-cu-ky-e6012f2/