Article 1: Expansionary Fiscal Policy to Support the Economy
Expansionary fiscal policies support the economic recovery. Illustration
Since 2020, especially during the period of 2020-2022, the world has experienced numerous upheavals, including the Covid-19 pandemic, armed conflicts, and natural disasters. To tackle these challenges, countries have allocated significant resources through the implementation of unprecedented fiscal and monetary policies, and Vietnam is no exception.
In 2020, the Covid-19 pandemic began to spread in Vietnam. To combat the pandemic and address its negative impacts, Vietnam implemented timely and unique solutions. Notably, in early 2022, the National Assembly issued Resolution No. 43/2022/QH15 on fiscal and monetary policies to support the Program for Recovery and Sustainable Economic and Social Development, along with resolutions on several important national projects until the end of 2023 (Resolution 43), with a series of fiscal and monetary support packages. According to statistics, fiscal policies accounted for about 83% of the total value of the Recovery Program. In carrying out its assigned tasks, the Ministry of Finance has been proactive in managing to ensure both budget revenue estimates and timely fulfillment of expenditure tasks.
Specifically, from 2020 until now, implementing an expansionary fiscal policy, Vietnam has reduced nearly VND 200,000 billion annually in tax, fee, charge, and land rent exemptions and reductions for citizens and businesses… In mid-June 2024, the Government issued Decree No. 64/2024/ND-CP on the extension of the deadline for value-added tax, corporate income tax, personal income tax, and land rent in 2024. This is the fifth time the tax extension policy has been applied and the fourth time the value-added tax reduction policy has been implemented to support businesses and people to overcome the difficulties caused by the Covid-19 pandemic.
Through the audits of the State Audit Office of Vietnam in 2023 for the 2022 budget year on evaluating the implementation of tax exemption and reduction policies according to Resolution 43 and Decree No. 34/2022/ND-CP of the Government on the extension of the deadline for paying value-added tax, corporate income tax, personal income tax, and land rent in 2022, as of the end of August 2023, the total amount of taxes, fees, and charges that have been exempted and reduced cumulatively implemented according to the policies of the Program is VND 102,831 billion (VND 60,531 billion in 2022 and VND 42,300 billion in the first eight months of 2023), of which the amount in 2022 is 94.5% compared to the expected amount when building the Program. This result has contributed to reducing costs for people and businesses, stimulating domestic consumption, reducing input costs, and curbing inflation, especially in the context of rising prices of raw materials for production and business.
Commenting on the tax extension policy, National Assembly Deputy Tran Van Lam, a member of the Standing Committee of the National Assembly’s Finance and Budget Committee, said that this policy is even more meaningful than tax reduction. Every year, the amount of tax extension is very large, amounting to more than one hundred thousand billion VND, which can be considered as a 0% interest-supported amount, helping businesses have capital for reinvestment in production and business and overcoming difficulties.
Dr. Can Van Luc, a member of the National Financial and Monetary Policy Advisory Council, assessed that the highlight of fiscal policy in the past five years has been the implementation of large support packages, such as tax, fee, charge, and land rent exemptions, reductions, and extensions from 2020 to the end of June 2024, amounting to VND 754.3 thousand billion…
Experts believe that the solutions to support the business community to overcome difficulties, including policies to reduce and postpone corporate income tax, value-added tax, land rent, and other types of taxes and fees, have contributed to the early recovery and development of production and business activities of enterprises, thereby contributing back to the economy, to the state budget, nurturing stable revenue sources, contributing to macro stability, ensuring major balances, controlling inflation, and promoting socio-economic development.
However, recently, many economic experts have advised Vietnam to return to maintaining fiscal policy in a normal state as before the Covid-19 pandemic outbreak, as the Vietnamese economy is currently experiencing a positive growth rate, even projected to reach 6.5% in 2025-2026…
What are the recommendations of economic and budget experts on fiscal policy in the coming time? Please follow Article 2: “Conducting Expansionary Fiscal Policy Reasonably” in the Audit Newspaper issued on September 11 for more insights.
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