Expenditure pressure is getting higher
The Ministry of Finance has just announced the draft Law on Personal Income Tax (amended) with a proposal to increase the family deduction to a maximum of VND 15.5 million/month from 2026. Many workers and experts believe that this is a positive step forward but has not yet kept up with actual spending pressure, especially in large cities.
Ms. Ha Thi Thanh Nga - Literature teacher, Le Quy Don High School (Hai Phong City) - said: "The current family deduction rate is too low while prices are rising, people with average incomes have to pay personal income tax. In the 2 options proposed by the Ministry of Finance, option 2 - increasing the deduction for taxpayers to 15.5 million VND/month (186 million VND/year); each dependent is entitled to a deduction of 6.2 million VND/month, which is reasonable, solving current shortcomings".
Agreeing with the above view, Ms. Vu Thi Thu Huyen - currently Director of MM Supermarket Thanh Xuan (Thanh Xuan, Hanoi) - said: "Among the two new proposed options, I feel that option 2 is more reasonable. Even with the current situation, the family deduction and dependents should be increased further. With the current pressure of spending and living, it is difficult for workers to think about accumulation when they have to pay a large amount of personal income tax".
Ms. Huyen specifically illustrated that if the family deduction and dependents are increased: "For example, with an income of about 45 million VND/month, dependents are two children, I will have a family deduction of 15.5 million VND/month + 6.2 million VND/dependent, the total amount of deduction is 27.9 million VND. From there, the remaining income payable for tax is VND 17.1 million/month, corresponding to a tax rate of 15%. At this level, my personal income tax payment has been significantly reduced.
Or Dr. Vu Tien Dung - Lecturer of the Faculty of Mechanical Engineering - School of Mechanical Engineering, Hanoi University of Science and Technology - said: "I hope the family deduction and dependent deduction level will be increased according to option 2 or even higher and should be applied as soon as possible to reduce spending pressure for workers, especially in urban areas. Because for a family living in Hanoi, with 2 children, the average spending is at least 40 million VND/month".
The maximum of 15.5 million VND/month does not reflect enough spending pressure
Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University - said that adjusting the family deduction level is necessary in the context of rapidly changing income and living expenses, however, the proposed 13.3-15.5 million VND still does not fully reflect the actual income and living expenses.
"The deduction of 11 million VND/month has been issued since 2020, when the average income per capita was 3,548 USD. By 2024, this figure had increased to 4,622 USD, an increase of about 30%, while inflation in this period only fluctuated from 0.81% to 4.16%, he said.
He said that Vietnam is a country with an average income, so it is not possible to expand personal income tax to the entire population, but it is necessary to focus on taxing the group with a fairly good average income or higher. Therefore, determining the deduction level is not only based on per capita income or living expenses, but needs to take into account an important factor, which is "flash" income - the most common income that the majority of people working in salary jobs currently have.
" Assuming the average income per capita in 2024 is 4,622 USD (ie about 118 million VND/year, equivalent to 10 million VND/month), the majority of salaried workers may be earning between 8,000 and 11,000 USD/year - or about 17 to 23 million VND/month. Therefore, to ensure long-term fairness and stability, the deduction for taxpayers should start from 20 million VND/month, he proposed.
should allow annual automatic adjustments
Sharing the same view, Mr. Nguyen Quang Huy - CEO of the Faculty of Finance - Banking, Nguyen Trai University - assessed the proposal to increase the family deduction level as a reasonable step forward but not fully reflecting the actual spending pressure, especially for the urban middle class.
"The current deduction level is outdated. The actual costs of education, healthcare, housing, energy, etc. in urban areas all increased more strongly than the CPI due to high core inflation. The 13.3-15.5 million VND level has not kept up with this increase, said Mr. Huy.
Mr. Huy emphasized the need to link the adjustment of the deduction level with the consumer price index (CPI) and national trungential income, while allowing annual automatic adjustments, instead of waiting for the law to be amended. "In addition, we should study the zoning mechanism - for example, the deduction in Ho Chi Minh City and Hanoi is higher than in other provinces - as the current method of regulating regional minimum wages".
Mr. Huy also proposed to loosen the conditions for proving dependents and add a mechanism for additional deductions for high social expenses such as tuition fees, medical expenses other than health insurance. The personal income tax policy needs to be more flexible to both ensure revenue and support workers appropriately, he said.
