The proposed VAT rebate was meant to be a short-term stimulant to the economy and therefore should not be extended, the government has insisted.
“With the VAT reduction proposal, the government only wants to boost spending short-term to resolve current economic difficulties,” Minister of Finance Ho Duc Phoc told the National Assembly on June 1.
He was responding to lawmakers’ requests to extend the rebate to 1-2 years.
Tran Chi Cuong, a lawmaker from Da Nang, said that the rebate should last until the end of 2024, as the proposed six-month period is too short.
Another lawmaker Mai Thi Phuong Hoa said that it should be extended to 2025 to bring about the full impact to the economy.
She also proposed that the State Bank of Vietnam order banks to keep their loan interest rates under 9% per year.
The government is seeking the National Assembly’s approval on reducing VAT from 10% to 8% for the last six months this year to support the economy.
But it has excluded some sectors such as telecommunications, banking, property, and auto manufacturing.
Lawmaker Nguyen Thi Viet Nga from Hai Duong Province said that auto manufacturers should also receive the tax reduction as they also face challenges such as large inventories due to declining sales.
Auto sales in the first four months were 22,400 units, the lowest in four years, she added.
Phoc, however, said that only essential sectors will receive the tax rebate.
The National Assembly is set to vote on the proposal on June 24.