Proposing the Government to study increasing the family deduction level for personal income tax

Chairman of the Economic Committee Vu Hong Thanh - Photo: GIA HAN

On the morning of May 9, the National Assembly Standing Committee focused on giving opinions on the supplementary assessment report on the results of the implementation of socio-economic development tasks and the state budget in 2022; the implementation of the socio-economic development plan and the state budget in the first months of 2023.

Proposal to report additional debt structure related to real estate

Minister of Planning and Investment Nguyen Chi Dung said that the socio-economic situation in 2022 achieved many important results.

Economic growth in the first quarter of 2023 is estimated at 3.32% over the same period last year, lower than the scenario in Resolution No. 01/CP (5.6%). The industrial and construction sector decreased by 0.4%, of which industry decreased by 0.82%, slowing down the growth rate of the entire economy.

Besides, although the lending interest rate has decreased by 0.41 percentage points compared to the end of 2022, it is still high, averaging 9.56%/year.

In the audit report, Chairman of the Economic Committee Vu Hong Thanh stated that as of April 25, credit only increased by 2.75%, showing that production and business are facing difficulties, and the ability of enterprises and the economy to absorb capital continues to be difficult.

High interest rates make businesses reluctant to borrow and businesses face difficulties with output orders so they do not borrow. The lending interest rate level will increase sharply in 2022 and remain high in the first quarter of 2023.

The average lending interest rate of 35 domestic commercial banks as of the end of March 2023 was about 10.23%, 0.56 percentage points higher than at the end of 2022.

According to the Economic Committee, the implementation of the project to restructure the system of credit institutions associated with bad debt settlement in the 2021-2025 period and the plan to handle weak credit institutions, projects and works with slow progress, ineffective investment, and prolonged losses is still very slow.

Bad debt tends to increase, while the ratio of credit risk provisions to bad debt decreases, which may affect the safety of the financial system. According to the National Financial Supervisory Commission, the value of bad debt increased by 40.2% compared to the end of 2022 (the same period in 2022 increased by 8.8%).

The average bad debt ratio of the whole system by the end of March 2023 is 2.88% (2.05% at the end of 2022). The average credit risk provision/bad debt ratio of the whole system is 80.8% (114.2% at the end of 2022).

The average specific provision ratio/bad debt in lending to economic organizations and individuals across the system is 54.1% (77.2% at the end of 2022).

The Committee also requested the Government to provide additional reports on debt structure related to real estate (including real estate enterprises, home loans, real estate business...).

Notably, in the context of businesses facing many difficulties, commercial banks have high profits, in which net income from credit activities continues to increase compared to 2021.

In 2022, Vietcombank will lead with pre-tax profit reaching more than 37,000 billion VND, followed by Techcombank (more than 25,500 billion VND), BIDV (more than 23,000 billion VND), MB (nearly 23,000 billion VND).

The average return on equity for the banking industry is close to 20% - a very high rate.

However, some opinions say that with the current difficult situation, if not improved, it is predicted that the bad debt of banks will increase rapidly in the coming time and will significantly erode the financial capacity of commercial banks.

Strive to reduce lending interest rates

The Economic Committee recommends that the Government operate monetary policy proactively, flexibly, and effectively, in close coordination with fiscal policy and other macroeconomic policies.

It is necessary to proactively and promptly "change the operating state" from tightening and caution to "adapting and loosening appropriately", continuing to consider lowering operating interest rates to support growth in the context of inflationary pressure and exchange rates that are no longer as tense as at the end of 2022.

Encourage banks to reduce costs and strive to reduce lending interest rates to support businesses in recovering and developing production and business.

In addition, the Government also needs to study the option of adjusting and increasing the family deduction for personal income tax. Reducing value added tax from 10% to 8% applies until December 31, 2023 for all goods and services currently subject to a tax rate of 10%...

According to Tuoi Tre