Top official discusses budget shortfall

Deputy Minister of Finance Nguyen Thi Minh

Many deputies said state budget collections this year might not reach the set goal. Is this so?

Around $23 billion was paid to state coffers in the first eight months of 2013, tantamount to only 59.4 per cent of the estimate but up 8.7 per cent on-year.

Reaching the target may prove very challenging, and would require the finance, tax, customs and state treasury systems to work together in finding a solution with help from local authorities.

Localities need to have a clear audit of tax sources in their areas and scale up checks and inspections to ensure tax-payers follow regulations.

If all relevant authorities chip in to develop solutions and improve business performance, the NA budget targets can be achieved.

Why there was a drop in budget collections?

Firms’ production and earnings are down, and that clearly means falling tax income.

Recently I was on a trip outside Hanoi and one provincial leader told me they might lose $14 million in budget collections. When I asked him ‘why?’ he blatantly explained that a foreign business had registered an auto assembly and manufacturing centre on-line early this year, they later changed this plan because of economic troubles. This plant was expected to make a significant addition - $14 million – to our coffers. That was the plan and it didn’t come through and that leaves our forecast for the year way off.

What caused the difference between budget estimates and real income?

This comes from a combination of things. The most important being that forecasts for the coming year often start in July, which can make it difficult to have a clear picture of the economic situation months in the future; this is particularly true and normal in an emerging economy where market factors fluctuate drastically.   

What, so far, does the budget look like for 2014?

In light of prime ministerial Directive13/CT-TTg in August the Ministry of Finance discussed budget estimates for 2014 with localities based on properly reviewing implementation of budget collections in 2013 and 2014 production-business performance forecasts.

Economic growth and inflation for 2014 are estimated at 6 and 7 per cent, respectively. We are using that information toward the goal of having taxes and fees equal to 18-19 per cent of GDP. Collections from domestic sources (exempt are crude oil and property rentals) will go up 12-13 per cent and from import-export up 8-9 per cent.