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Price increases an obsession to personal income tax payers
Personal income tax payers, who are listed as “high income earners” in society, say that the personal income tax law is “out of date” with a taxation threshold that is too low.
Everything is getting more expensive, from petrol, electricity and food to consumer products. Meanwhile, the taxation threshold has not been raised.
The Personal Income Tax (PIT) Law which took effects in 2009, qualifies seven million people to become tax payers. They are regular employees and have high income. The PIT law stipulates the deductions of four million dong a month, or 48 million dong a year for tax payers, and the deductions of 1.6 million dong per dependent family member. Income that exceeds the allowed deductions will be taxed.
For example, if a tax payer has a monthly income of 10 million dong and has two dependent children, he will have to pay taxes for the after-deduction sum of 2.8 million dong 10 – (4 + 3.2) = 2.8.
Phuong, a state employee on Bach Mai street in Hanoi, said that the stipulated deductions prove to be “out of date”, because the deductions were set up many years ago, when the consumer price index was lower than nowadays.
“The expenses to raise a child in a family are much higher than the allowed deduction of 1.6 million dong. It seems that when building up the law, policy makers did not include the expenses for sickness and the prices increasing,” Phuong said.
There are five members in Phuong’s family, including her husband’s old parents, Phuong and her husband, and a 4-year-old child. Phuong can earn four million dong a month, and she does not have to pay income tax. The expenses for the family have been covered by her husband, who has a monthly income of 12 million dong
“Previously, our income was considered “high income”. However, it has become “low income” in the price storm,” she added. “We cannot save money to have one more baby as planned for the next year”.
As the prices have been escalating, Phuong and her husband are planning to enroll the child in a public school instead of a private school, which will help cut down the tuition by a half. “This is really a difficult decision for us, but we have to. However, the problem now is that it is very difficult to enroll in public schools, because all the schools are overcrowded,” Phuong said.
Thu, an office worker for a structural steel company in Hanoi, also said that the most unreasonable provision of the PIT tax law are the deduction levels for dependent people. With the income of nine million dong a month, Thu can have the deductions of four million dong for herself and 1.6 million dong for her son, while she has to pay 5 percent tax on the other sum of 3.4 million dong.
“Previously, the tax sum of more than 100,000 dong was never a problem to me. However, nowadays, as everything is getting more expensive, I feel my life is getting harder,” Thu complained.
Thu said that the deduction of 1.6 million dong is too low if compared with price levels. The tuition for her five year old son at a public school is 700,000 dong a month. If counting the expenses on meals, milk and clothes for the boy, the sum of money would be at least two million dong. Sometimes, Thu has to pay three million dong a month for her son when he is sick.
“I think that tax policy makers need to reconsider deduction levels,” she said
Meanwhile, Hanh, a state employee in Dong Da district in Hanoi, has suggested raising the deduction level for tax payer from four million dong to six million dong.
However, an official of the Ministry of Finance said that it is very difficult to adjust the taxation threshold and the deduction levels right now. “We cannot think of slashing taxes every time when we meet difficulties. Especially, PIT is a kind of tax which targets high income earners. The majority of people are poor people who are not covered by the law,” he said.
vietnamnet
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