Increasing family deductions - 'Relaxing people's efforts' in tax policy

Scene of the meeting on the morning of October 17. Photo: VNA

This is considered an important adjustment step to ensure fairness and reasonableness in tax policy, in accordance with economic and social fluctuations and people's lives.

Evaluating this policy, Mr. Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Company Limited, said that adjusting the family deduction level is completely necessary and reasonable.

“Taxpayers, especially wage earners, have been at a disadvantage for too long. The current family deduction no longer reflects the actual cost of living. The increase to VND15.5 million/month for taxpayers and VND6.2 million/month for each dependent is appropriate in the context of rising prices and living expenses,” Mr. Duoc said.

According to him, the family deduction policy needs to ensure fairness among income groups and must be adjusted more flexibly according to fluctuations in the consumer price index or other socio-economic indicators. He said that the current regulation of only adjusting when the CPI increases by 20% or more is no longer appropriate.

The Government should proactively adjust when the CPI fluctuates by 5-10%, so that policies are more timely and realistic," Mr. Duoc suggested.

Personal income tax family deduction, applied from the 2026 tax period, settlement time in the first quarter of 2027.

Many people also expressed their agreement with this adjustment policy. Ms. Nguyen Thi Thu, an office worker in Hanoi , shared that, with the current living standard, 11 million VND/month is only enough to cover basic expenses. If it were raised to 15.5 million VND, it would be more reasonable, helping workers have more room to spend and save. Mr. Ho Nhat Tung, an IT engineer in Ho Chi Minh City, said that the adjustment policy is positive but needs to have a mechanism for periodic updates, instead of changing it once every 5 or 7 years. "Prices are escalating every year, if the old deduction level is kept the same, workers will suffer," he said.

From the perspective of a salaried employee, Ms. Nguyen Thi Hoa, a primary school teacher in Thanh Hoa, said that the adjustment of the deduction level is "very desirable". "Our income is about 12-13 million VND/month, while the cost of living and education of children increases rapidly. The current deduction level is no longer suitable, so raising it will help a lot for families with young children", Ms. Mai shared.

In the private sector, Mr. Bui Quang Huy, a technical employee at a mechanical company in Bac Giang, expressed: “Every month, I have to spend nearly 4 million on rent, not to mention electricity, water, gas, and food. If I get a higher deduction, the tax I have to pay will be lighter, helping me save more for my family.”

Regarding whether the budget revenue will decrease when the family deduction level is increased, Mr. Nguyen Van Duoc said that we should not be too worried, because it can be compensated by expanding the tax base and preventing revenue loss. According to Mr. Nguyen Van Duoc, we can increase revenue from real estate, e-commerce, or transfer pricing of enterprises. More importantly, we need to nurture long-term revenue sources, not exploit them. When people are less pressured, they spend and invest more, thereby contributing to promoting economic growth and increasing sustainable revenue for the budget.

According to experts, the National Assembly Standing Committee's approval of the Resolution adjusting the family deduction level not only helps "ease people's burdens", but is also an important step in reforming personal income tax policy.

Presenting the Government's Proposal, Deputy Minister of Finance Nguyen Duc Chi said that adjusting the family deduction level is necessary in the context of prices, living expenses and people's incomes all increasing significantly compared to 2020. The Government has submitted two adjustment options to the National Assembly Standing Committee.

According to option 1, the deduction level is adjusted according to the growth rate of the consumer price index (CPI) with a cumulative fluctuation of 21.24%. Then, the deduction level for the taxpayer himself will increase from 11 million VND to about 13.3 million VND/month, and the deduction level for each dependent will increase from 4.4 million VND to 5.3 million VND/month. Applying this option is expected to reduce the state budget by about 12,000 billion VND per year.

Option 2 is based on the growth rate of per capita income and per capita GDP, expected to increase by about 40-42% in the period 2020-2025. Accordingly, the deduction for the taxpayer himself will be 15.5 million VND/month and for each dependent is 6.2 million VND/month. When implementing this option, the state budget can reduce about 21,000 billion VND/year compared to the current revenue level.

Through discussion, the majority of opinions in the National Assembly Standing Committee and the Standing Committee of the National Assembly's Economic and Financial Committee agreed to choose option 2, considering this an adjustment direction more suitable to the current income and purchasing power of the people. Vice Chairman of the National Assembly Nguyen Duc Hai concluded that the members of the National Assembly Standing Committee unanimously approved the Resolution as proposed by the Government, and at the same time suggested continuing to study and supplement appropriate contents to serve the process of amending the Law on Personal Income Tax in the coming time.

According to VNA

Source: https://baohaiphong.vn/tang-muc-giam-tru-gia-canh-khoan-suc-dan-trong-chinh-sach-thue-523899.html