Is the regulation of 20% CPI fluctuation to adjust personal income tax rate reasonable?

In Report No. 76/CQLG-THPTDB dated April 8, 2013 of the Price Management Department (Ministry of Finance), market price statistics for March 2013 are as follows: In the North, the price of rice usually fluctuates at 6,000-8,500 VND/kg. In the South, the price of rice is at 5,000-5,875 VND/kg, down 125 VND/kg. Prices of some vegetables, tubers and fruits: Cabbage 8,000-9,500 VND/kg; potatoes 12,000-13,000 VND/kg; tomatoes 12,000-13,000 VND/kg. Prices of some seafood products such as carp are 70,000-75,000 VND/kg.

After 10 years, in Report No. 164/CQLG-CSTH dated April 26, 2023, the commodity market report for March 2023 showed that the average price of rice was 12,200 VND/kg, equivalent to an increase of 43% compared to 2013. The price of carp was 80,700 VND/kg. The average price of cabbage was 14,100 VND/kg.

10 years ago was also the time when the family deduction stipulated in the Personal Income Tax Law (PIT) was first amended. Accordingly, from July 1, 2013, the deduction for taxpayers was 9 million VND/month (108 million VND/year); the deduction for each dependent was 3.6 million VND/month.

By the 2020 tax period, the family deduction for taxpayers will continue to be adjusted to VND 11 million/month (VND 132 million/year); the deduction for each dependent is VND 4.4 million/month.

Since taking effect in 2009, the family deduction level has been adjusted twice to suit the actual situation.

According to Associate Professor Dr. Pham The Anh - Head of the Faculty of Economics, National Economics University, one of the most frequently mentioned shortcomings is the family deduction level. "The law stipulates that when the inflation rate increases by 20%, the family deduction level will be adjusted, but it is clear that when applied in practice, many problems have arisen" - Associate Professor Dr. Pham The Anh said. In fact, some basic goods in the period of 2013-2020 have increased 2-3 times, not 20%. Moreover, experts say that if inflation remains around 15-17% for a long time, the adjustment is not feasible, but from the perspective of consumers, households will suffer.

Speaking with Lao Dong, Associate Professor Dr. Dinh Trong Thinh - lecturer at the Academy of Finance - even commented that the regulation that only when the CPI fluctuates by more than 20% will taxable income be adjusted is unreasonable.

He said that people's living standards are improving day by day, especially those in big cities. This year's 5% inflation is different from next year's 5% inflation, they are not the same. Therefore, there is no need to set a ceiling of 20%.

Salary increase, people are both happy and worried

Sharing with taxpayers, Dr. Nguyen Ngoc Tu - Tax expert, lecturer at Hanoi University of Business and Technology - said that for people in big cities like Hanoi or Ho Chi Minh City, the cost of living is very expensive. Even the income is not enough to live.

Sharing the same view, Mr. The Anh also commented that people's income only needs to improve slightly to be subject to new taxes, reaching a peak of 35%, which is very high compared to middle-income countries.

Or as Mr. Thinh gave an example, this year the regional salary and basic salary increased, making people more excited, however, a series of individuals who previously earned about 8-9 million VND/month, after the salary and income increased, will be subject to tax. Therefore, the increase in income is both happy and worried.

As shared with Lao Dong, Pham Thi My (Ha Dong) - a teacher at a private high school in Hanoi - said that My's current monthly income fluctuates around 30 million VND, this is the actual amount received after deducting monthly personal income tax.

Being young, My takes on as many lessons as possible. In addition, My is also a homeroom teacher, participates in organizing extracurricular activities... so her income is higher than other teachers. However, this income is still not enough for My to cover all the expenses for her family, such as medical examination, rent for the couple, and support for her parents.

"My husband and I are ambitious to buy a house in Hanoi to settle down, but my husband is currently owed salary, most of the family's expenses depend on my salary. My father is seriously ill, so every month I still send him money for medicine. In addition, I am undergoing medical treatment to have a baby in 2024" - My confided.