Although difficult to quantify with any accuracy, anyone familiar with the business environment in Vietnam is aware that a large proportion of economic activity is “under the table,” also euphemistically called “the informal economy.”
Employers and employees in business and government seem to have become experts in avoiding their responsibility to pay a fair share of taxes to support the development of Vietnam and provide adequate services. The extent to which people evade taxation has a direct effect on the quality of life here, but more than that, it is a matter of fairness.
For quite some time now, there have been some weak attempts to “encourage” government officials to submit documentation for income and assets, but, as might be expected, there have been few, if any, who have complied.
Should the issue be pushed, assets and income are easily transferred to family members or elsewhere to avoid any tax liability. This group of high income people represents a huge amount of taxable income for the country, and, thus, a huge potential investment in education, healthcare, and infrastructure which is sorely needed.
Tax evasion by the wealthy, particularly by those who have gained wealth through no effort of their own other than the exploitation of people, their land and other non-renewable resources, has had a direct effect on all public services resulting in an incompetent workforce, unrelenting violent crime, uncontrolled mania on the roads, a lack of hospital beds, no care for the mentally ill, inadequate fire protection, and no toilets for children at school.
Recently, I have spoken to numerous young people who have told me of the necessity to “purchase” a job in Vietnam. One young person said: “An average job in the banking industry would cost between US$1,000 and $2,000, but a good job could cost as much as $10,000.” She said further, that her parents offered to buy her a job at $10,000, but, she declined – opting to find her own position in the industry.
As we already know, from reports in Vietweek about purchasing government jobs at $5,000, that “purchasing” a position in the government is also quite common, and, certainly, we can assume that this is standard practice in many areas. Where does this “informal” money go?
I have also been told that “kickbacks” for contracts are standard procedure, as well as upfront cash payments to local government officials before an enterprise, training program or charity is allowed to operate.
And, of course, we can’t forget bribes paid to police. Virtually everyone in the government is willing to admit that the police are earning a great deal of discretionary spending money, perhaps because they are so obvious, but what the police extract from the unlucky citizens is miniscule in comparison to millions pocketed every day by corrupt officials and businesses.
And the government in general is complicit by not enforcing strong tax laws which have the power to confiscate all unreported assets and income until the tax liability is paid – and then putting the onus on the wealthy to prove the original sources of such wealth – and that includes wealth distributed among family members.
Another way of avoiding a tax burden is “under the table monthly salary,” in addition to the official salary. While doing a workshop on Human Resources in Hanoi, I was asked by one of the participants: “How do you negotiate salary with new employees?” As I began to try and answer the question, she said: “No, no. I mean the ‘under the table monthly salary;” to which I responded: “I think that is illegal in Vietnam.” Then another participant said: “No, that’s not illegal.”
Apparently, standard procedure for government employment. Where does the “supplemental” salary come from in state owned enterprises?
None of this information comes as a surprise to Vietnamese citizens: To many, that’s just the way it is and will always be. Unfortunately, this kind of theft affects every man, woman and child in Vietnam and deprives them of a decent life in a law-abiding society.
Perhaps the next time a local resident needs to stay in hospital, sharing a bed with 2, 3 or 4 other patients, they can thank the well-established “informal” economy and the absence of a sustainable tax base.
Source Thanh Nien