“I don’t know on what bases lawmakers rely to define the VND500,000 maximum income limit for dependants,” a state worker named Loc in Tan Binh District wrote. “Do they think an old person can live on such a low income on their own?”

Loc said his mother, who is 68 years old, earns around VND600,000 per month from her small grocery store, of which VND400,000 is spent on medical expenses. His point is that despite her VND600,000 income, she is still dependent on her family.

Under the Personal Income Tax Law to take effect next January, taxpayers would be allowed deductions of VND1.6 million (US$100) for each dependent. The taxable income threshold is VND4 million ($238) monthly for both locals and foreigners working in Vietnam.

The definition of dependent includes children under 18 years of age, disabled children of all ages, unemployed spouses, and retired and unemployed parents.

But readers said there is a contradiction between the stipulated deduction of VND1.6 million for each dependent and the dependent’s monthly income limit of VND500,000: namely, the deduction figure is much higher than the limit to what a dependent can earn.

A tax official who wished to remain unnamed said the VND500,000 income limit for a dependent is too low, which could prompt taxpayers to avoid listing the incomes of their dependents.

Le Hieu Dang, deputy head of the municipal Fatherland Front, said the VND500,000 limit is unreasonable considering current skyrocketing prices.

Dinh The Hien, an expert in finance and investment, said taxpayers would bear greater burdens with the low income limit for dependents as they would have to both pay tax and support dependents.

Irrational policy

On October 10, the government issued a decree stating that as of next January, the minimum wage for business workers will be VND650,000-VND800,000 ($38.60-$47.50) monthly, depending on the regions.

The maximum income specified for a dependent is thus even lower than the minimum wage marker.

Also earlier this month, Ho Chi Minh City’s administration approved a new poverty line for residents of inner-city areas and new districts as VND1 million (US$59.40) per head monthly, while for residents in the city’s outskirts it is VND830,000 ($49.30) per head monthly, effective for the 2009-2015 period.

Dang said the dependent’s income limit in the tax law being lower than the new poverty line is unacceptable.

Hien said the majority of qualified income taxpayers under the law live in urban areas. The current poverty line in HCMC is VND500,000 per head per month until the changes come into effect.

For all other localities in the nation, current regulations set the poverty line at VND200,000 ($12) for rural residents and VND260,000 ($15.40) for city dwellers.

Reported by Thanh Xuan