Accordingly, as the Ministry of Finance proposed to the National Assembly for approval, the level for personal income tax payment will be raised from the current VND4 million to VND6 million per month along with the reduction level for family dependants being from VND1.6 million to VND2.4 million each.

It argued that the new adjustment will be related to six tax levels for individual taxpayers. For income earners of VND52 million or more, they will have to pay at least 30 percent of the total. However, there is growing concern that the adjustment to be applied as from 2014 is not in conformity with the reality as the current rate of inflation hovers around 18 percent and that the value of VND6 million by 2014 will not be higher than VND4 million at the moment.

This means that such tax relief for income earners with family dependants is of little or no value at all as in the case of State employees and workers.

The Chairman of the Dong Nai provincial Labour Union, Huynh Tan Kiet, says they will be those to suffer most.

Vo Van Vo, a taxpayer from the healthcare centre in HCM City, says that the proposed level for individual income tax payment sounds reasonable on paper but will not be practical when it is applied as from 2014.

“When I have to pay my income tax too much, I am not sure to make ado with what’s left from my earnings,” Vo explains.

Dao Thi Nham, a taxpayer from Hanoi, says the reduction level of VND2.4 million per month for each family dependant is not enough to keep pace with the rising costs of living.

“I have to spend approximately VND2.5 million per month for school fees and tuitions, not to mention other spendings.”  Nham says.

In fact, there remains a loophole in the personal income tax policy as the collection of taxes from higher income earners such as farm managers and small traders is without foundation.

Many experts maintain that personnel income tax payment must be based on the living situation of people, including millions of workers who are still under difficult circumstances.

While taxation agencies have failed to get full tax payment from high-income earners due to unreasonable regulations, it is unfair to focus on middle-income earners such as State employees and workers.

Pham Minh Thanh, Deputy Director of the Dong Nai provincial Social Insurance Department, says the adjustment in personnel income tax payment will have no impact on social welfare as workers still find themselves in a difficult position to scrape out a living. VND4 million is not enough for them in the face of price hikes.

So, the late application of such adjustment will not be worth the effort.

(Source: VOV)