During a discussion session on the socio-economic situation and State budget on November 5, Minister of Finance Dinh Tien Dung, on behalf of the Government, explained a number of issues of concern that National Assembly deputies mentioned in the past three days.

Minister of Finance Dinh Tien Dung explains a number of issues. Photo: Quochoi.vn 

Revenue reduces 12.5%

Regarding the 2020 State budget estimate, State budget revenue in the first 10 months of the year clearly reflects difficulties of enterprises and the impacts of tax and fee exemption and reduction policies. Specifically, State budget revenue in 10 months reached 75.2% of the estimate, down 10.3% compared to the same period in 2019, the lowest level in the last 10 recent years, the Minister of Finance said.

Some localities that contributed large revenues to the central budget have had low revenues in the 10 months, namely Hanoi 70.1%, HCM City 64.8%, Vinh Phuc 60.8%, Da Nang 56.4%, Quang Nam 45.5% and KhanhHoa 58.8%.

In addition to measures to support tax exemption, reduction and extension for firms, the Ministry of Finance also instructed tax and customs agencies to strengthen revenue management and combat revenue loss and transfer pricing.

As a result, in the first 10 months of the year, 48,900 inspections were conducted; more than 436,000 tax records were inspected at the tax agency; VND 39,684 billion were handled; in which, State budget revenue was VND 13,267 billion, a deduction was VND 1,187 billion, a reduced loss was VND 25,229 billion. At the same time, VAT refund and a fine were VND 117 billion. In nine months, the tax agency collected VND 20,292 billion of outstanding tax debts from 2019.

For the assessment of the whole year, the minister said that the Ministry of Finance has reviewed and worked very carefully with localities.

"On the basis of expected GDP growth of 2-3% (compared to the target of 6.8%), this year's State budget revenue is estimated to see a decrease of VND 190 trillion (12.5%) compared to the estimate. With this result, we still have to increase spending on natural disasters and pandemic prevention and social welfare and security,"said Dung.

He agreed with the National Assembly deputy Vu ThiLuu Mai (Hanoi) and others on the proposal to review the spending estimate of capital construction investment for 2021 and 2021-2025 and the socioeconomic infrastructure investment should give prioritized for regions which suffered serious damages by natural disasters, storms and floods.

Due to reduction in State budget revenue and increase in spending, to ensure balance of the State budget, it is required to continue saving spending. Up to now, at least 70% of inbound and outbound business trip expenses have been cut, saving another 10% of recurrent expenses except wages and others(VND 17.400)

On the other hand, the Government proposed the National Assembly allow an increase of the State budget deficit by about VND 95 - 133.5 trillion by 2020, corresponding to a budget deficit rate of about 4.99 - 5.59% of GDP. Public debt is estimated at 56.8 - 57.4% of GDP.

"The implementation of socio-economic development and the State budget task is seriously affected by the Covid-19 pandemic, natural disasters and epidemics, but thanks to fiscal space accumulated in the past four years from 2016 to 2019 from the restructuring of the State budget, management of public debt safety in accordance with Resolutions of the Politburo and the National Assembly, we still meet the requirements on spending on important tasks, including urgent tasks arising from natural disasters, epidemics, national defence and security and ensuring sources for development investment according to the 2020 estimate to stimulate domestic demand, create a driving force for economic growth in the medium and long term to come. This can be considered a bright spot in the financial and State budget work in the 2016-2020 period,” said Dung.

Spending estimate in 2021 reduces by VND 60,000 billion

Regarding the State budget estimate for 2021, on the basis of a close assessment of the revenue capacity of each locality in 2020 and the forecast of the global economy, the Government predicts budget revenue on the basis of GDP growth of 6%, inflation below 4 % and an oil price of 45 USD / barrel.

On the other hand, the impact of the Covid-19 pandemic on socio-economic development and the State budget will not only stop in 2020, but also in 2021, maybe in a few years to come.

"On that basis, after working with localities, we expect that the growth rate of domestic revenue from production and business in 2021 will be 5.6%, compared to the estimate in 2020, it is quite positive rate in risky conditions," the minister reported.

However, the State budget revenue estimate in 2021 will be 1.34 million VND (down nearly VND 170 trillion compared to the estimate in 2020); the revenue mobilisation rate to the state budget will be 15.5% of GDP; in which, revenue from tax fee will be 13% of the revised GDP (respectively 19.7% and 16.6% ofunrevised GDP).

To have more resources for development investment and create a driving force for socio-economic development and stimulate domestic demand, the Government proposed a State budget deficit in 2021 of 4% of GDP (corresponding to 5% of unrevised GDP), up 1.5% compared to the 2020 estimate (an increase of VND 109 trillion). The State budget deficit is only for development investment (not recurrent spending). Then public debt in 2021 will be 46.1% of revised GDP (equivalent to 58.6% of the unrevised GDP).

Accordingly, the revenue estimate in 2021 and budget deficit in 2021 will still decrease by about VND 60,000. At that time, recurrent expenditure in 2021 will decreaseby 56 trillion dong compared to the estimate in 2020.

"Therefore, it is required that in 2021, we must thoroughly save recurrent spending; and effectively implement the resolutions of the central, National Assembly on the organisational structure, staff streamlining and acceleration of socialisation of public service delivery units," said Minister Dung.

Up to now, about VND 19 trillion has been spent on prevention, fighting and support for people affected by the Covid-19 pandemic from the additional revenue due to spending savings from 2019. At the same time, the State budget has also spent about VND 12.5 billion to support livestock households affected by African swine fever.

For support for relief of disasters, storms and floods,the Government has provided VND 382 billion to 11 northern mountainous areas for damage relief by hail, thunderstorms, tornadoes and landslides and VND 530 billion to eight localities in the Mekong River Delta to overcome drought and saline intrusion.

For the influence of floods in the central and Central Highlands in October 2020, the Central budget initially provided VND 500 billion to five central localities; the Government is completing a support mechanism for housing damage caused by natural disasters, rain, storms and floods in October for people in some central provinces and the Central Highlands. Accordingly, it is expected that the central budget will have to provide additional support to localities about VND 1,000 billion (itis expected that the central budget will support VND 40 million for a household whose house has been collapsed or drifted; 10 million VND for a household whose house has been seriously damaged) .