Government thinks too much when rescuing businesses

Apr 27th at 01:19

27-04-2013 01:19:12+07:00

The national economy remains very pale, while businesses have died like flies. Meanwhile, the government is still busy with particular calculation when mapping out the solutions to rescue businesses.

The government’s draft resolution on the measures to support enterprises has not been ratified by the National Assembly’s Standing Committee, which said that it was too small to be approved by the National Assembly.

The government has asked the National Assembly to release a resolution on the tax measures to help ease the enterprises’ difficulties. It has also asked to approve the resolution in a simplified procedure to ensure that the policies can be brought into life soon.

The government has affirmed that if the resolution gets approval, it would help small and medium enterprises get stabilized and develop their production and business. The expanded investment incentives would help call the investments into some certain business fields and localities.

The proposed tax reductions in the real estate sector are believed to help more workers get accessible to accommodations, thus helping stimulate the real estate demand and clear the big inventories. Meanwhile, the bad debt settlement solution through the VAT policy would also help ease difficulties in the immediate time.

The suggested support package is believed to be a “magic wand” which can help settle many existing problems at the same time. However, the package has a very modest value of VND2.6 trillion.

The package is so small that Chair of the National Assembly’s Finance and Budget Committee -- Phung Quoc Hien, commented that with such a modest value, the package would not be able to reach the end of “helping small and medium enterprises overcome difficulties, stabilize their production and help clear the inventories” as expected by the government.

While the package scale is small, the validity of the package is limited. The government, for example, has suggested that the VAT support would be applied to the investment and business activities during the period from July 1, 2013 to June 30, 2014 only.

The National Assembly’s Finance and Budget committee has also pointed out the unreasonable calculation of the government when designing the policies to support businesses.

For example, the government has suggested the tax exemption or reduction for the enterprises which develop new production lines, expand the business scale, renovate technologies, and upgrade the productivity.

Most of the members of the finance and budget committee believe that in the current circumstances, the support should be given only to the enterprises which are really in big difficulties. Meanwhile, the enterprises mentioned by the government are not the “enterprises in big difficulties” which need the urgent support from the state.

The government has suggested the 30 percent VAT reduction on the activities of selling, leasing the apartments with the floor area of less than 70 square meters and the minimum sale prices of less than VND15 million per square meter, carried out from July 1, 2013 to the end of June 30, 2014.

Meanwhile, the finance and budget committee believes that those who can afford the apartments with the area of less than 70 square meters and the sale prices of less than VND15 million per square meter are not high income earners, and that the tax reduction should be 50 percent instead of 30 percent as suggested.