22
the period of 2011-2016.
Thirdly,
the tax cut reduces the state budget
revenues from export taxes and import taxes, and
value added tax (VAT) excise duty. However, the
cut on imports taxes reduces the price of imports,
the demand for imports will increase, which leads
to an increase in imports and revenues from import
duties, VAT and excise duty from imports will
go up as well. Therefore, since Vietnam reduced
tariffs until 2011, revenue from import and export
activities increased steadily, especially since
Vietnam joined the WTO in 2007.
Fourthly,
tariff reduction may indirectly reduce
state budget revenue from VAT, excise duty on
domestic commodities. When imports’ price
decreases, the demand for imports increases,
the demand for domestic goods will decrease.
Consumption of domestic goods decreases.
However, from positive views, customs duty
deduction lowers import’s prise, domestic firms
have to decrease commodity prices, which may
encourage consumption of domestic goods and
increase the revenue from VAT and excise duty
levied on domestic products.
Recommendations
After 10 years of WTO accession, Vietnam has
achieved remarkable achievements in economic
development. However, the Vietnamese economy
has experienced many difficulties and challenges.
In order to limit negative impacts and maximize
opportunities of integration, the author would like
to endorse some recommendations as follows:
- Regarding financial market:
+Continuetoopenthefinancialmarketeffectively
in accordance with international commitments;
Monetary andBankingmarkets:WTOaccession
is a driving force for reformation and innovation
in banking. Since the banking system was
transformed from a one-tiered model to a two-tier
model, the legal framework for banking activities
has been gradually developed and completed
according to the Law on the State Bank of Vietnam
and The Law on Credit Institutions in 2010. About
the restructuring of credit institutions under
Decision 254/QD-TTg dated 1/3/2012 of the Prime
Minister, the project “Restructuring the system of
credit institutions in the period 2011-2015 “was
approved. This project has been implementedwith
three issues: stabilizing liquidity for the banking
system; strengthening the financial situation,
dealing with bad debts and restructuring the
banking system’s organization, operation and
management. These are new breakthroughs to
develop the banking system in the context of
economic restructuring. However, the integration
has been posing many difficulties and challenges
for the management and supervision of banking
activities in order to ensure the safe development
of the banking system.
Impacts on state budget revenues
WTO accession required member countries’
commitments to cut tariffs on imports, so state
budget revenues are greatly affected:
Firstly,
revenues from import-export activities
have decreased, while the proportion of domestic
revenue has increased. The average revenue from
import-export activities in 2001-2006 reached
258.75 trillion VND; After joining the WTO, the
highest budget revenue only reached 239 trillion
VND in 2014 and over 297 trillion VND in 2017.
Since 2007, the structure of state budget revenue
has been shifted towards increasing the proportion
of domestic revenue in total state budget revenue,
generating revenue to offset the reduction of
import tax.
Secondly,
the cut of import tariffs has directly
reduced revenue from import duties, especially in
the last five years. Regarding the structure of state
budget revenues, revenues from import and export
have tended to decrease since 1999, fromabout 24%
in the period 1995-1999 (when tariff reduction was
not implemented according to AFTA) to average
20% in the period of 2000-2010 and average 18% in
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
FIGURE 3: VIETNAM’S TOTAL REGISTERED FDI
IN THE 2007 - 2017 PERIOD (MILLION USD)
Source: General Statistic Office
