The debate over whether to tax savings interest income has reignited discussions among financial experts and local government authorities across Vietnam. The proposal, primarily led by the People's Committee of Cần Thơ, garnered significant attention and raised concerns about its impact on the banking sector and individual savers.
Recent recommendations suggest extending personal income tax (TNCN) to include interest earned from bank savings, particularly targeting larger deposits. Under current regulations, only corporate deposits are subject to taxation; individual savers enjoy tax exemptions on their earnings, largely perceived as fair, considering these funds have already been taxed prior.
Võ Văn Quang, Deputy General Director of Bac A Bank, noted, “I believe the personal income tax should be levied on bank savings interest earned by individuals. Many countries like China, Thailand, and South Korea do this.” His call reflects the international trend toward taxing such income, which aims to bolster local revenue streams.
Contrastingly, Cần Thơ’s proposal received pushback from financial experts who argue against taxing savings interest. PGS-TS Đinh Trọng Thịnh, Senior Lecturer at the University of Finance and Banking, stated, “This is not the first time this proposal has been put forward, and it continues to face strong opposition from many economic experts.” He indicated the inherent unfairness of taxing interest earned on money already subjected to various taxes before being deposited.
According to statistics from the State Bank of Vietnam, as of November 2024, total personal savings deposits reached approximately 7 million trillion VND, the highest recorded to date, illustrating the trust citizens place in banks. Such figures underline the potential risks associated with any proposed taxation on savings interest; experts warn it could discourage saving and drive capital away from banks toward alternative investments like real estate or gold.
TS. Cấn Văn Lực emphasized the potential repercussions of the tax, asserting, “If the public perceives the taxation of savings interest as unfair, they will likely withdraw their funds from banks to invest elsewhere, negatively impacting financial stability and growth.” His concerns spotlight how fundamental shifts away from traditional banking solutions could threaten both liquidity and bank lending capabilities.
Similarly, TS. Nguyễn Quốc Hùng, Vice Chairman of the Vietnam Banking Association, pointed out, “If there is taxation on savings interest, the general public will likely limit deposits, making it harder for banks to mobilize capital.” Those sentiments are echoed among banking specialists who call for measures to encourage saving rather than penalize it. Hùng's reflection on the balance of fiscal policy with the banking sector's stability resonates strongly with industry stakeholders.
The Ministry of Finance has drawn attention to the broader economic principles guiding their deliberations. They stressed the need for tax policies to maintain equity and consistency, asserting the imperative to adapt taxation frameworks to match broader financial realities. Government officials have highlighted international comparisons, noting how countries like Thailand, China, and South Korea manage similar tax structures. While acknowledging diverse practices, the ministry advocates caution, seeking to avoid forcing excess government involvement in household financial decisions.
The discussion has garnered varied opinions from local economic experts such as Nguyễn Quang Huy, financial executive at Nguyễn Trãi University. He remarked, “Any taxation must guarantee fairness. The tax on savings interest may not remain justly imposed if income from alternative investment channels like real estate and stocks remain untaxed.” His insights usher forth concerns surrounding the equity of taxing savings, emphasizing the potential for creating imbalances across investment avenues.
While some propose the taxation of savings interest as a method of generating revenue, others like Lê Vân Anh, director of a Hanoi business, argue for the importance of directing money back to productive sectors rather than allowing it to stagnate within banks. Lê believes fair taxation can promote investing over saving, stating, “Taxing savings interest could motivate businesses and individuals to pursue viable investment options, enhancing societal value creation.”
Overall, the debate over taxing savings interest embodies fundamental questions of economic policy, fairness, and the function of government. Policymakers are urged to weigh potential benefits against likely reactions among the populace. The need for detailed impact assessments and thoughtful dialogue has never been clearer, as any shift could affect millions of Vietnamese citizens who prioritize saving as part of their financial strategy.