CULTIVATING SUSTAINABLE INCOME SOURCES IS NOT JUST ABOUT TAX REDUCTION AND INCENTIVES
Dear Deputy Prime Minister, 2024 can be said to be an emotional year not only for the people and businesses but also for those who run the country's economic sectors. How do you view what we have done in the past year?
- Deputy Prime Minister HO DUC PHOC: 2024 is a year of many challenges. Conflicts between many countries and territories, fluctuations in the world economy, high inflation, disruptions in some supply sources, and the FED's interest rate management all affect our country's monetary and fiscal policies. However, under the leadership of the Party, the efforts of governments at all levels and the people, especially the business community, we have risen to comprehensively achieve socio-economic targets.
Budget revenue in 2024 as of December 24, 2024 reached about 1,968 trillion VND, exceeding 15.6% of the estimate and 16.62% of the same period in 2023 (equivalent to 280 trillion VND).
The country's economic targets have all been achieved. Our GDP has increased by over 7%. The CPI is controlled at 3.88%. In addition, import-export turnover has surpassed all previous records with over 800 billion USD, of which the trade surplus is about 25 billion USD. Public debt has decreased from 43.1% at the beginning of the term to under 37% now. Budget deficit has been managed under 4%.
The implementation of expansionary monetary and fiscal policies has reduced commercial banks' lending rates to businesses.
And despite reducing taxes by nearly VND200,000 billion for businesses, we still achieved a revenue of VND1,968 trillion. This result reflects the positive recovery of the economy and efforts in budget management.
Not to mention, we have also invested heavily in infrastructure, completed over 2,000km of highways, striving to have about 3,000km of highways completed by 2025 and about 5,000km of highways by 2030, approved the policy of building high-speed railway systems such as the Hanoi - Ho Chi Minh City high-speed railway, have pre-feasibility projects and investment policies for many other railway projects. We also accelerated the progress of Long Thanh airport, completed many investment items at a number of airports across the country.
It can be said that in 2024 we will achieve comprehensive victory in both socio-economic aspects, creating momentum for development in 2025.
Over the years, how has the management agency managed to balance the pressure of ensuring budget revenue targets on one side and nurturing sustainable revenue sources on the other, Deputy Prime Minister?
- Deputy Prime Minister HO DUC PHOC: We have had to simultaneously implement three principles: Collect correctly, collect fully and nurture revenue sources.
The financial sector has promoted administrative procedure reform, enhanced digitalization, modernized budget collection management, closely monitored business health, global and domestic economic developments, and assessed the impact on each revenue item, tax, and locality, identified risks early, and issued and synchronously implemented expansionary fiscal policy packages from the beginning of 2021.
In addition to not omitting the prescribed revenue sources, focusing on preventing smuggling and other fraudulent acts, it is also necessary to closely follow production and business activities to expand the collection base, mobilize budget revenue in accordance with the law, for example, collecting from cross-border e-commerce platforms, domestic e-commerce platforms, buying and selling on digital platforms, implementing inspection, examination, and preventing revenue loss in areas with large potential such as minerals, petroleum, food and beverage services, and accommodation.
Thus, ensuring support for businesses but not missing out on revenue sources, ensuring fairness and healthy competition among businesses.
From 2021 to the end of 2024, we have exempted, reduced, and extended payment for nearly 3.7 million taxpayers with 8 types of taxes and 36 types of fees such as environmental tax on gasoline, VAT... with an amount of nearly 800,000 billion VND.
Total state budget revenue over the past 4 years is estimated at about 7.2 million billion VND, reaching 86.5% of the target for the 2021-2025 period of 8.3 million billion VND, of which the total state budget revenue managed by tax authorities accumulated over the 2021-2024 period is estimated at about 6.1 million billion VND, equal to 119% of the estimate, with an average growth rate of about 8.6%/year.
In recent years, this has been a great success in boosting budget revenue and balancing accounts in a sustainable manner.
On the National Assembly floor, when we heard him say "it's sad to talk about tax reduction", we understood that tax reduction sounds like an easy medicine for businesses and people in difficult times, but does not really cure the root of the problem?
- Deputy Prime Minister HO DUC PHOC: A strong country must be a country with a strong economy and a strong budget. Only then can we invest in new technical infrastructure projects, ensure the operation of the apparatus, ensure social security, strengthen national defense and security, innovate technology... While the main source of revenue for the state budget is from taxes, reducing taxes will affect the budget revenue.
So instead of thinking too much about tax incentives, we should discuss how to make our businesses stronger, so that businesses and people can be proud and have self-respect when contributing a lot to the budget.
As businesses grow stronger, their production and business performance will increase, and their budget revenues will increase. Our goal is to create many strong businesses that are competitive not only domestically but also with foreign businesses, reaching international levels.
In short, nurturing sustainable revenue sources is not simply about tax incentives but also about creating a sustainable economic ecosystem, creating a business community with internal strength and large stature.
If businesses are relieved of many of the pressures, they will have a stronger motivation to develop, reinvest and create more jobs for workers. A strong business environment will be a decisive factor in the long-term stability of the national budget.
“LEGAL PROVISIONS PAVE THE WAY FOR BUSINESS DEVELOPMENT”
In your assigned position and tasks, what is the biggest concern of the Deputy Prime Minister at this time to create a sustainable economic ecosystem, sir?
- Deputy Prime Minister HO DUC PHOC: I think we must promote business development for the economy to develop. To do that, legal regulations must pave the way.
The internal strength of enterprises is the first issue, while the state will complete the legal framework, reduce administrative procedures and have a mechanism to train human resources to master science and technology.
Technology is also something we have to think about because we are using too much old technology. Technology needs to be constantly innovated and updated to integrate internationally. We need to focus resources on investing in technology transformation, I believe it will create a breakthrough for the whole economy.
In the coming time, as Head of the Steering Committee for Enterprise Innovation and Development, what plans do you have to contribute to making those things come true, Deputy Prime Minister?
- Deputy Prime Minister HO DUC PHOC: First of all, we focus on implementing Resolution 18 of the Central Committee on streamlining the apparatus, especially the state management apparatus and state-owned enterprises (SOEs).
We will also pave the way for SOEs to develop and give them more autonomy. For example, we will study and propose to amend Law No. 69/2014/QH13 (Law on Management and Use of State Capital Invested in Production and Business at Enterprises) as well as related laws. The State will only control enterprises with State capital through criteria and give more autonomy to SOEs. The State will expand the space for innovation so that SOEs can take responsibility for themselves, proactively update technology, increase investment attraction, and form joint ventures with foreign enterprises to move quickly and strongly, and must create new breakthroughs from within, creating new vitality for enterprises.
In fact, not only state-owned enterprises but also enterprises with state shares that want to increase capital find it difficult to do so, because the state does not have a mechanism to reduce the holding ratio due to concerns about losing state capital. But to maintain the ratio, the budget has to spend more money and we do not have a mechanism to disburse that expenditure. How will the Steering Committee for Enterprise Innovation and Development solve the problem of handling obstacles in ownership conversion and restructuring of state-owned enterprises in the coming time, sir?
- Deputy Prime Minister HO DUC PHOC: In recent years, the Government has paid great attention to the development of state-owned enterprises and continuously increased capital so that state-owned enterprises have enough capacity to expand the market. In addition, state-owned enterprises that have been operating effectively for many years have also been continuously increased in capital. The issue here is that if their operations are effective, they will be given priority in increasing capital, including state-owned enterprises and enterprises with state shares.
The State will strictly control to limit negative aspects in the capital increase process, for example, virtual capital increase to put capital into the stock market or the stock market. Effective activities will be given priority and ineffective activities will of course be carefully considered.
As the growth engine of the economy, investment in the non-state economic sector is recovering slowly. What solutions can be implemented to stimulate private investment growth again, sir?
- Deputy Prime Minister HO DUC PHOC: I think the most important thing for private enterprises is to have a good market. A good market will start from the internal strength of the enterprise, creativity, quickness in grasping trends, management capacity and updating technology, improving the quality of human resources.
The State will create conditions to reduce pressure on businesses through tax policies, minimize administrative procedures, decentralize and delegate power to ministries, branches and localities to handle procedures quickly and easily, and focus on regularly removing obstacles for businesses.
The State will also support businesses in finding markets, supporting human resource training, and providing early forecast information so that businesses can better respond to global economic movements.
The obstacles in public investment disbursement are also quickly resolved to make disbursement faster. When borrowing capital quickly and settling payments faster, capital will circulate faster and businesses will develop better.
I believe that when the Law on Public Investment (amended) is issued, public investment capital will develop strongly in 2025. Enterprises participating in the public investment chain such as manufacturing enterprises, construction enterprises, commercial banks, and supporting enterprises will all benefit, the scale and vitality of the economy will increase and the competitiveness of our enterprises will be greater.
High technology, digital economy, green economy are the key development goals in the coming time, but will we have an easy time on this new journey? What is your prediction about the economy in 2025, Deputy Prime Minister?
- Deputy Prime Minister HO DUC PHOC: I think the challenge on the journey of green economy and digital economy will be the issue of technology and mastering technology.
We need to create a human resource to effectively apply new technologies. We need to invest properly to attract high-quality human resources from abroad, train local human resources and attract international experts.
And when it comes to technology, we must choose the latest technology so that the development speed can keep up with the world. This will also be related to issues of policy mechanisms and legal improvement, in order to attract FDI capital to invest in the latest technologies.
I believe that 2025 will be the year when Vietnam's economy will develop strongly, because we have taken into account the legal foundations, difficulties and obstacles and have prepared relatively, synchronously and methodically.
Especially with the direction of the Politburo headed by the General Secretary, we have the firm belief that state management agencies will join hands with businesses and people to create momentum for the country to develop strongly and steadily enter a new era of the nation.
Thank you very much, Deputy Prime Minister. I wish you and your family good health and happiness in the new year.
(Posted on the special edition of Lao Dong Xuan At Ty)
