Vietnam ponders tax revenues
Sustainability has become a great concern for Vietnam since running a budget deficit has become commonplace over the past 20 years, even in times of rapid economic expansion and growing tax revenues, said National Institute for Finance director Vu Nhu Thang. Fiscal stability required tight management of Government expenses and revenues to avoid economic shocks, said experts at the conference.
The efficiency of budgeting for expenditures also remained low, Thang said, and revenue collections depended mainly on "non-recurrent" items such as oil and land use fees. Revenue from import duties were also going to continue to fall as the country fulfilled its commitments on tariff reductions under WTO commitments and other free trade agreements.
The challenge was therefore how the country could maintain revenue collections sufficient to sustain expenditure levels at about 30 per cent of GDP, high compared with neighboring countries, Thang said.
Fiscal policies needed to project forward for a period of three-to-five years in line with analyses and forecasts for economic growth, commented Su Dinh Thanh from HCM City University of Economics.
Statistics from the World Bank have shown that most countries around the world applied medium-term expenditure frameworks of 5-10 years in managing their budgets, Thanh added.
Tax policy also needed to be reformed to develop a comprehensive and sustainable regime in line with international standards that would ensure sufficient long-term revenues for the State budget, he said.
Measures for applying modern technology for record-keeping to support Government budget management were also discussed at the conference.
Duong Quoc Cuong from FPT Information Systems said that there was no coordinated system or connection among different localities and budget centers.
"A national public finance information system is critical to help ensure the efficiency of State budget management, together with a medium-term expenditure framework," Cuong said.
Pham Cong Minh, deputy director of the Ministry of Finance’s Department of Financial Information and Statistics, said that challenges to the development of such a system would be how to collect data adequately and create easy access to users.
The two-day conference wraps up today with a further discussion of technological solutions. The Minister of Finance has set a target of furnishing 100 per cent of financial units at the provincial level with e-portals by 2015.
