Stabilizing state budget: Property tax reform in Vietnam

• Main Author: Lưu, Thị Tâm
• Other Authors: Nguyen, Cam Nhung
• Format: Theses
• Language: English
• Published: 2020
• Subjects: Chính sách kinh tế; Ngân sách nhà nước; Quản lý thuế; 352.48
• Online Access: http://repository.vnu.edu.vn/handle/VNU_123/70369
• Institution: Vietnam National University, Hanoi

In the context of declining revenues from oil, foreign trade and state-owned enterprises in Vietnam state budget, the Government of Vietnam has been reforming to find more stable revenues, property tax is a potential source despite property tax revenue accounts for a small propotion now. In theory, real property taxes can be stable revenues to local budgets and self-adjust due to increasing price of houses and land as the economy grows. However, compared to internations, Vietnam does not taxes on land improvements, which means that the tax base is narrow. Besides, the taxable land price is regulated and fixed over a five-year period without adjusting the update according to the market value. These restrictions reduce the tax fairness as well as the unrealized collection of budget objectives. Therefore, based on tax design theory and lessons learned from some other countries, this research suggess several solutions to increase revenues by collection process, then wider tax base and raise tax rate in long-term. In the first period, the government strengthened the efficiency of collection, in particular completing databases, using information technology and propaganda to increase voluntary morality; In urban area, tax price adjusted annual; In the long term, the government will gradually increase tax rates, expand tax bases with improvements on land as well as adjust land prices by GDP and ad-valorem to ensure the tax efficiency and feasibility; In addition, the government needs to consider, evaluate tax exempt policies, instead using these revenues to improve the quality of public goods.