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Tax payment extension will help stimulate demand: experts
Dr. Tran Du Lich, Deputy Head of the HCM City Delegation of National Assembly Deputies, believes that tax payment extensions and tax reductions are necessary now to help businesses overcome difficulties and stimulate demand.
Lich said:
The Government has submitted to the National Assembly provisional solutions to deal with the difficulties of the national economy, which include the corporate income tax (CIT) payment extension and tax reduction for those enterprises that are having difficulties. It is a good policy, but not enough. In principle, only profitable enterprises have to pay CIT, while unprofitable do not have to pay the tax. Therefore, the tax payment extension or tax reduction will have no significance.
Therefore, the support policies should be designed to make them fit every business. Profitable businesses should have different policies than unprofitable businesses, so as to minimize the number of bankrupt businesses.
What additional solutions can you suggest to help businesses having difficulties to receive suitable support from the State?
I think that the Government can allow the businesses to extend the payment of value added tax (VAT). In principle, VAT is paid by consumers, and businesses just collect the tax to pay to the state. Allowing enterprises to extend the VAT payment can be seen as providing capital to enterprises, especially small ones who always find it difficult to borrow money from banks.
Do you think that it is necessary to extend the personal income tax (PIT) payment or raise the PIT threshold?
In fact, the PIT Law has just had changes in the content and the tax collection mechanism does not expand the subjects of taxation in comparison with the Ordinance on High Income Tax.
However, hundreds of thousands of business households will have to pay PIT instead of CIT, and they have been worried about that?
I think that we should allow the extension of the tax payment for small production workshops run by households. Of course, this will affect the tax collection in 2009. I think that the tax collection target seems to be higher than the realistic capability.
The state is encouraging investment. Do you think that we should delay collecting taxes from securities investors?
I think that in the current conditions, the PIT Law could not be applied to real estate and securities investors because they do not have profit to pay tax. This is not an urgent matter for now. The two markets need other ‘remedies,’ as I think the tax collection delay will not bring about effects.
Associate Prof Dr Tran Hoang Ngan, Deputy Headmaster of the HCM City Economics University:
Some people have suggested delaying the implementation of PIT law, slated for January 1, 2009, and raising the rebates for taxpayers. However, I think that we should only raise the family rebates for taxpayers themselves and dependent members, while we should not delay the implementation of PIT law. We are now stimulating investment, not stimulating consumption.
We need to allow the extension of the tax payment, tax reduction or exemption for enterprises, especially small and medium enterprises, and the enterprises and business households in rural areas. We could also consider raising import taxes on products, the consumption of which is not encouraged. This will help push up the consumption of domestic products and help increase the tax collection to the state budget.
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