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Tax Incidence in Vietnam

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  • Jonathan Haughton
  • Nguyen The Quan
  • Nguyen Hoang Bao

Abstract

This paper examines the incidence of taxation in Vietnam, using data from the Living Standards Survey of 1997–1998 and an input–output matrix for 1997. The tax system in 1998 was slightly progressive, taking the equivalent of 7.8percent of spending for households in the lowest, and 10.3percent from households in the highest expenditure quintile. The replacement of the turnover tax by a value‐added tax in January 1999 made the system marginally more progressive, and the falling importance of taxes on trade has had a negligible effect on the overall incidence of the tax system. The tax system is progressive overall because business income taxes fall mainly on better‐off households; and low‐income households rely heavily on home consumption, which is untaxed. Against this, agricultural taxes and fees are highly regressive. The recent phasing out of the agricultural land use tax is making the tax system more progressive; however, efforts since 2004 to limit price increases for motor fuels have effectively provided a relatively greater subsidy to rich than to poor households.

Suggested Citation

  • Jonathan Haughton & Nguyen The Quan & Nguyen Hoang Bao, 2006. "Tax Incidence in Vietnam," Asian Economic Journal, East Asian Economic Association, vol. 20(2), pages 217-239, June.
    • Handle: RePEc:bla:asiaec:v:20:y:2006:i:2:p:217-239
    DOI: 10.1111/j.1467-8381.2006.00231.x
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    References listed on IDEAS

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    1. Tarp, Finn & Roland-Holst, David & Rand, John, 2003. "Economic structure and development in an emergent Asian economy: evidence from a social accounting matrix for vietnam," Journal of Asian Economics, Elsevier, vol. 13(6), pages 847-871, January.
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    4. Nguyen Chan & Madanmohan Ghosh & John Whalley, 1999. "Evaluating Tax Reform in Vietnam Using General Equilibrium Methods," University of Western Ontario, Departmental Research Report Series 9904, University of Western Ontario, Department of Economics.
    5. International Monetary Fund, 2003. "Vietnam: Statistical Appendix," IMF Staff Country Reports 2003/382, International Monetary Fund.
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    Cited by:

    1. Gangadha Prasad Shukla & Duc Minh Pham & Michael Engelschalk & Tuan Minh Le, 2011. "Tax Reform in Vietnam," World Bank Publications - Reports 26851, The World Bank Group.
    2. Henrik Barslund Fosse & Pascalis Raimondos‐Møller, 2012. "Reducing Tariffs According to WTO Accession Rules: The Case of Vietnam," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 331-341, May.
    3. Xi Wei & Nie Yingqin & Cheng Xiran, 2019. "Indirect Tax Burden of Regional Residents: Study on Long Term MRIO Model," Journal of Systems Science and Information, De Gruyter, vol. 7(6), pages 568-583, December.
    4. Mai, Nhat Chi, 2012. "Market timing, taxes and capital structure: evidence from Vietnam," OSF Preprints t3mvs, Center for Open Science.
    5. Akram-Lodhi, A.H., 2001. "Landlords are taking back the land: the agrarian transition in Vietnam," ISS Working Papers - General Series 19098, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.

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