according to a scheme on fiscal and monetary policies to support the socioeconomic recovery recently sent by the Government to the National Assembly.

Consumers choose food items from a minimart shelf. The Government has proposed cutting VAT from 10% to 8% for certain goods and services. – Photo: VNA

The draft resolution on the program for socioeconomic recovery will be presented at the first extraordinary meeting of the 15th National Assembly today, January 4.

The Covid-19 pandemic has negatively affected many trade and production activities, resulting in weak economic growth in 2020 and 2021, according to the Government.

“The pandemic does not just cause short-term impacts but also affects the long-term economic plans of five and 10 years. Without appropriate solutions to support the economy, the average economic growth rate of the 2021-2025 period would reach only 5.4% a year, much lower than the target,” the Government said.

Therefore, the Government has drawn up the scheme on fiscal and monetary policies to support the program for socioeconomic recovery and submitted it to the National Assembly for a review.

The scheme comprises five major groups of targets and solutions, including general solutions to reopen the economy while ensuring Covid-19 infection prevention and control; improving the healthcare capacity; social security and job support; facilitating the recovery of enterprises, cooperatives and household businesses; infrastructure development; administrative reforms and improvement of the business environment.

The Government proposed a fiscal package worth VND291 trillion (US$12.8 billion), including VND240 trillion sourced from the State budget, for the program. The Government planned to reduce and cut taxes, land rentals and fees worth up to VND64 trillion for enterprises, cooperatives and household businesses.

In accordance with this package, environment protection tax on aviation fuel would be cut by half and VAT would be reduced from 10% to 8% on certain goods and services.

The tax cut would not be applied to some industries such as telecommunications, finance and banking, insurance, real estate, metal production and mining.

The Government also planned to continue to cut land rentals by 30% in 2022, reduce import tariffs for some commodities, cut auto registration fees by half for cars produced or assembled domestically, and cut 35 other taxes and fees.

Up to VND176 trillion from the State budget would be spent on investment for development, including upgrading and modernizing the healthcare system, especially local centers for disease control and central hospitals and institutes.

Regarding support for social security and job creation, the Government proposed building new vocational, job and social protection centers as well as upgrading existing ones.

The package also comprises interest rate cuts for enterprises, cooperatives and household businesses, especially those active in industries hit the hardest by Covid-19, such as aviation, transport, tourism, accommodation, catering services, education and training, agriculture, processing and manufacturing, and social housing.

Regarding infrastructure development, the package will focus on strategic transport infrastructure projects such as the North-South Expressway and some other expressways connecting border gates and national highways. It will also prioritize landslide prevention, climate change adaptation, digital transformation, and digital infrastructure projects.

The Government also proposed using some VND6.6 trillion from the State budget savings last year to cover the shortfall caused by extending payment deadlines for taxes and land rentals, and to pay room rents for laborers.

Source: SGT

Government urged to reduce VAT to stimulate economy

The world economy is speeding up while Vietnam’s growth is slowing down. Economists believe that the VAT (value added tax) should be reduced to stimulate demand, because it could result in immediate benefits.