As authorities are yet to check all of the income sources of tax payers, tax agencies are currently targeting sources which they can easily reach, namely salaries and wages.
Under Vietnam's personal income tax law, people with monthly incomes of over VND4 million (US$194) have to pay taxes a deduction of VND1.6 million allowed for each dependent. There are many people who don't pay more than VND50,000 ($2.41) in taxes a month.
Although taxes collected from salaries and wages are not much, the tax department is still able to get a lot of revenue when the small amounts are combined.
This is totally different from how developed countries view tax collection. I once asked Kenichiro Otake, former director general of the National Tax Agency, if Japan loses tax revenues. He said it does, but they are small and inconsiderable.
Why bother to collect taxes from people with low incomes when those collected from people with high incomes would easily make up for what is lost by ignoring low-income people, he asked. In this case, the added advantage would be that the tax collection apparatus would be lighter and never get overloaded as is the case in Vietnam.
Drawing on experiences of other nations, I think that while the (tax) law is in its initial stages, we need to study how to best amend it so that people feel more "comfortable" when paying taxes.
In my opinion, we should decrease tax rates or increase deductions for dependents while increasing the difference between tax rates to guarantee revenues from taxes on people with high incomes first. Only later should we increase tax rates for everyone.
If we try to tax all people with low income, we'll discourage them and force them to find ways to evade paying their dues.
Nguyen Thai Son (former chief of Ho Chi Minh City Tax Department's Personal Income Tax Office)