The Vietnamese government is currently facing significant debate over the proposal to tax interest income from savings deposits, which has sparked concerns among financial experts and local authorities alike. According to the Ministry of Finance, input from various ministries and local governments, including Cần Thơ, supports the idea of revising the current laws on personal income tax. The Cần Thơ People's Committee has particularly stressed the need to research extending the tax base and is proposing to exempt only smaller savings interest incomes from taxation, leaving larger deposits subject to the new tax.
This proposal arises from the government’s search for avenues to increase state revenue as the tax exemptions currently enjoyed by individuals with interest income are seen as limiting potential fiscal resources. PGS.TS. Đinh Trọng Thịnh, a financial expert, indicated disbelief at the resurgence of this proposal, noting, "The proposal is surprising as it was rejected years ago," referencing previous similar suggestions made back in 2011.
Concerns about the proposal are echoed by multiple figures within the financial sector. Cấn Văn Lực, another financial expert, warns, “Taxing interest income on savings deposits would lead to negative impacts on the economy.” He elaborates by saying such tax measures could reduce the amount of money individuals deposit, pushing higher interest rates as banks scramble for capital and, by extension, putting pressure on businesses reliant on loans. He argues, “The flow of savings might shift away from banks, driving individuals toward alternate investment avenues such as real estate or cryptocurrency.”
Supporting this apprehension, N.T.B., who advises businesses within the banking sector, asserted, "People have already paid taxes on their income before they save; taxing interest is like double taxation." This sentiment appears widespread among both financial analysts and the general public, who fear such measures could discourage savings and drive funds out of the banking system.
Lawyer Nguyễn Sương from the Da Nang Bar Association emphasized the overarching principle of fairness when it pertains to taxation. He states, “Not all income should be taxed,” pointing out the importance of ensuring tax policies do not burden citizens with excessive financial strains. The tax structure is expected to promote justice rather than unfairly penalize individuals, especially those who have already fulfilled prior tax obligations.
The idea to impose taxation on savings interest is not novel; there have been prior proposals to enforce such practices as recently as 2013 and 2017, none of which gained traction. Experts argue the financial environment has not significantly changed to warrant revisiting such taxation, as PGS.TS. Đinh Trọng Thịnh emphasizes. Expressing skepticism, he mentioned, “If taxes are imposed, people will move their savings to other investments, harming the banking system,” echoing the overall sentiment against the proposed tax and its potential fallout on the banking sector.
With inflation and costs of living continuing to rise and the interest rates on savings deposits remaining relatively low, many believe taxing such income could do more harm than good. PGS, TS. Nguyễn Hữu Huân from Ho Chi Minh City University of Economics highlighted the economic dangers involved, stating individuals may choose to withdraw their savings and invest elsewhere, leading to higher competition among banks for for deposit assets. This competition could spur increased interest rates, complicate lending practices, and hinder business investments when funding becomes scarcer.
Government officials are called to carefully weigh the benefits of the proposed taxation against the potential economic ramifications. Cần Thơ's local authorities and economic advisors are urging thorough examination before implementing any tax changes, especially those revolving around savings deposit interest. If passed, such sweeping reforms could tip the balance of public confidence within the banking sector and disrupt the current financial order.
This debate surrounding the taxation of savings interest introduces significant questions about economic, social, and fiscal policy and will likely linger as stakeholders from across sectors evaluate both the potential financial benefits and economic consequences of such legislative changes.