Vietnam - State budget to gain hefty revenue from land

HANOI – The State budget will gain US$4-5 billion from the land fund every year in the period from 2011 to 2020, said the Ministry of Finance.

In particular, the total State budget revenue from land use fees, land rentals, non-agricultural land taxes and land use right transfer taxes will average out at over VND81.6 trillion a year. In case land prices marked up 20%, the figure would surge to above VND98.6 trillion per year.

The main reason for this hefty revenue is the expansion of land used for several purposes from now to 2020. Specifically, land for industrial parks will rise by 128,000 hectares, urban land by 68,000 hectares and land for other purposes than farming by 210,000 hectares.

In fact, the revenue may be higher as land use fees and land rentals are gradually approaching the market prices, and land auction will likely replace land allocation and leasing.

To realize such revenue, the finance ministry will continue to reform the financial policy for the land fund. Meanwhile, the State needs to take the initiative to regulate land prices based on the supply-demand relationship and ensure land prices will be calculated in accordance with the market principles.

In this spirit, the current land price frame will be removed. The Government will only provide principles and methods to determine land prices so as for provincial governments to issue appropriate land price lists with each region and the land use purpose.

Land valuation methods will also be revised to follow the market prices, preventing property companies from making profits from land price differences.

In addition, the State will boost land recovery to create a land fund for auction, restricting land allocation and leasing to ensure disclosure, transparency and fairness.

The fact that the State budget revenues from land record high growths over the years serves as an important resource to develop infrastructure. Land use fees make the greatest contribution and have the highest growth.

The revenues from land stood at some VND5.4 trillion in 2002, or 4.4% of the total State budget revenue. In 2010, the land revenues surged to over VND67.7 trillion, making up 11.2% of the State budget revenue.

Tu Hoang - The Saigon Times Daily

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