The family deduction of 4.4 million VND/person/month is too outdated.

Ms. Nguyen Thi Thuy speaks (Photo: Quang Vinh)

Giving 4 reasons for the need to adjust the family tax deduction, Ms. Thuy analyzed: Firstly, the deduction of 4.4 million VND/month is really no longer suitable for current life, especially in big cities, causing disadvantages for taxpayers. This deduction has been maintained since 2020, while in recent years, many essential goods and services have increased, with some items even increasing faster than income.

According to the General Statistics Office, compared to 2020, the price of education services increased by 17%, the price of food increased by 27% and especially the price of gasoline increased by 105%. Many voters shared that if a family has small children and has to hire a babysitter, the salary for the babysitter alone should not be less than 5 million VND/month.

If a family has children going to school, the cost of education accounts for the majority of the expenditure structure. If there are elderly parents, it is not only the cost of living but also the cost of medicine. Therefore, the current family deduction does not accurately reflect the basic expenditure of families.

"If we have to wait another 2 years to pass the Personal Income Tax Law as proposed, many people will be in a tight financial situation but still have to pay personal income tax," Ms. Thuy emphasized.

Second, according to Ms. Thuy, is the irrationality in the CPI basket of goods. According to the provisions of the Personal Income Tax Law, when the CPI fluctuates over 20%, the Government submits to the National Assembly Standing Committee for consideration of the family deduction level. Last March, the representative of the Ministry of Finance did not know and did not propose to adjust the family deduction level, because the CPI fluctuation was less than 20%.

Many experts and voters believe that the current Personal Income Tax Law uses the criterion of CPI fluctuation of 20%, which means it must be based on a basket of 720 goods, which is unreasonable, while essential goods, affecting people's spending, only affect about 20%, but waiting to calculate the average price of 720 goods will take a long time, even 6-7 years. This time is too long, does not reflect the fluctuation in spending of people and households, causing disadvantages for people.

Third, the current family deduction regulations are not suitable for a country with a low average income like Vietnam. Most of people's income will be spent on essential goods and services, for example, if the income is 10 million VND/month, the expenditure on essential goods and services must account for 70%.

According to a survey by the National Economics University, in countries with high incomes, for example, about 100 million VND/month, the spending on essential goods and services only accounts for 30%. Therefore, the current regulations on family deductions will directly affect people's spending on essential services.

Fourth, if salaries increase but income tax and family deductions are not adjusted in time, it will lead to problems. According to the plan, salary reform will be implemented from July 1, 2024. It is expected that the average salary of cadres, civil servants and public employees will increase significantly compared to the present.

“Salary increases but income tax and family deductions have not been adjusted in a timely manner will cause concern for workers, because salary increases mean taxable income also increases. This lack of timely adjustment will affect the meaning of salary reform,” Ms. Thuy said, suggesting that the Government soon submit the Law on Personal Income Tax in October this year, and submit it to the National Assembly for approval in May 2025.”

Source: https://daidoanket.vn/muc-giam-tru-gia-canh-4-4-trieu-dong-nguoi-thang-la-qua-lac-hau-10281032.html