The Taxing Conundrum: Why Those Who Pay Taxes Should Also Benefit from Social Housing

Income of 15 million VND/month qualifies for social housing but is still subject to PIT

In reality, an individual earning 15 million VND/month is subject to personal income tax if they have no dependents. This is because after deducting the 11 million VND/month personal allowance, the taxable income is 4 million VND/month, which is taxed at 5%.

However, according to Decree 100/2024/ND-CP, those with an income of less than 15 million VND/month are considered low-income earners and are eligible to purchase social housing. This discrepancy highlights policy overlaps and gaps, raising questions about the rationality of regulations in tax and housing support policies. It is contradictory that an individual is considered to have a high enough income to be taxed but is still categorized as low-income when it comes to housing support.

Maintaining the personal allowance at 11 million VND/month while living costs are rising has made personal income tax a burden for many workers. According to statistics from the General Statistics Office, from 2020 to 2024, the consumer price index (CPI) increased by more than 30%, implying a significant decrease in workers’ purchasing power. However, the personal allowance has not been adjusted accordingly, resulting in many middle-income earners also falling into the taxable category, despite their limited ability to save after covering living expenses.

According to Ms. Nguyen Thi Cuc, Chairman of the Tax Advisory Association, the current personal allowance of 11 million VND/month for taxpayers and 4.4 million VND/month for each dependent has been in effect since 2020. However, after four years, this amount is no longer considered appropriate given the rising prices and living costs.

Additionally, the conditions for determining dependents should be reconsidered. Currently, if a dependent has an income of over 1 million VND/month, they are not eligible for the allowance. This leads to an inconsistency: if a dependent has no income, the taxpayer can claim an allowance of 4.4 million VND/month, but if the dependent’s income is just slightly over 1 million VND/month, no allowance is given. This is an unreasonable aspect that needs to be adjusted to ensure fairness.

“It is necessary to consider increasing the personal allowance to a more reasonable level, in line with the minimum wage, per capita GDP, and consumer price index, to ensure the livelihood of taxpayers before they fulfill their tax obligations,” said Ms. Cuc.

The Chairman of the Tax Advisory Association also suggested reviewing the tax rates and amounts to ensure they align with people’s income and payment ability, while avoiding excessive tax burdens on workers.

“Adjusting the personal allowance in a more flexible manner is essential. The adjustment could be based on the inflation rate or average income to ensure timeliness and reasonableness. Moreover, clarifying taxable and non-taxable income sources is crucial to guarantee fairness among different taxpayer groups,” added Ms. Nguyen Thi Cuc.

Relaxing the income criteria for purchasing social housing

Apart from the issues with taxation, the social housing policy also has its shortcomings. According to the 2023 Housing Law and Decree 100/2024/ND-CP, the income requirement for purchasing social housing is no more than 15 million VND/month for single individuals and 30 million VND/month for households.

This means that an individual earning 15 million VND/month will be subject to personal income tax and, at the same time, qualify for social housing benefits, creating an overlap and inconsistency in fiscal and social security policies.

According to PGS. TS. Dinh Trong Thinh, a senior lecturer at the Academy of Finance, it is reasonable to relax the income criteria to expand the number of people eligible for social housing, given the current high housing prices, which are far beyond the reach of the majority of the population. The proposed threshold of 15 million VND/person/month could be in line with the upcoming adjustment to the personal allowance by the Ministry of Finance and the amendment to the Law on Personal Income Tax in 2026.

“Increasing the income threshold further is challenging because social housing is intended for low-income earners, with the government providing support to both developers and buyers. Therefore, the condition for receiving support is that the individual’s income is below the taxable threshold. Once the income exceeds this threshold, they can no longer be considered low-income,” said PGS. TS. Dinh Trong Thinh.

PGS-TS Dinh Trong Thinh suggested conducting research, surveys, and calculations on the spending levels of urban residents, and even in different regions, to adjust the personal allowance for taxpayers accordingly. The allowance could be adjusted based on the regional minimum wage, allowing for annual adjustments. Consequently, the criteria for purchasing social housing would become more reasonable.

“If an individual is subject to income tax, they cannot simultaneously be considered low-income. There needs to be a calculation to adjust the policy for reasonableness, ensuring fairness in resource allocation,” expressed PGS. TS. Dinh Trong Thinh.

According to economic experts, the contradiction in housing policies also increases the risk of policy exploitation. Some individuals may declare lower incomes than they actually earn to qualify for social housing, while those genuinely in need of support may be overlooked due to not meeting the exact income criteria. This not only distorts the market but also creates inequalities in the distribution of social security policies.

Regarding this issue, the Prime Minister Pham Minh Chinh recently directed the Ministry of Finance and the Ministry of Construction, through the document No. 1892/VPCP-KTTH, to study and consider adjusting the regulations related to individuals who pay taxes but are eligible to purchase social housing. This involves making adjustments to policies on social housing and personal income tax.

To ensure coherence between tax and housing policies, economic experts believe that there should be close coordination between the Ministry of Finance and the Ministry of Construction in redefining the taxable income threshold and the criteria for low-income earners when considering social housing policies. These amendments will not only eliminate policy contradictions but also strengthen people’s trust in the tax system.