Hanoi could lose over VND33 trillion (US$1.4 billion) in state budget revenue and another VND10 trillion (US$425 million) in municipal budget revenue this year, mainly due to business stagnation on the Covid-19 pandemic, according to Nguyen Doan Toan, vice chairman of the Hanoi People’s Committee.

Vice Chairman of Hanoi People's Commitee Nguyen Doan Toan. Photo: Thanh Hai.

The figure is more than double the estimated losses from Hanoi’s Taxation Department in its extreme scenario at VND16.6 trillion (US$712 million) where the pandemic lingers to the fourth quarter.

There are mounting difficulties to achieve the budget revenue targets in the last three quarters although budget collection in Q1 stayed on track at VND71.38 trillion (US$3.03 billion), up 6.7% year-on-year, said Toan at a meeting on April 24.

According to Toan, the structure of Hanoi’ state budget revenue has improved with domestic revenue accounting for 91.7% of the total at the end of 2019.

Meanwhile, the ratio of regular spending to total public spending declined by nearly 5% over the last four years to 50.7%, below the limit set by the government, Toan said, adding the city has more room to mobilize resources for economic development.

Toan stated local authorities are assessing impacts of the government’s relief packages for the business community and people affected by the pandemic on the state budget revenue while planning to further cut regular spending and use other savings to mitigate declines in budget revenue.

Secretary of the Hanoi Party Committee Vuong Dinh Hue. Photo: Thanh Hai

At the meeting, Secretary of the Hanoi Party Committee Vuong Dinh Hue said the city should focus on ensuring a balanced budget in 2020. He expected the city’s spending would not exceed revenue, and give priority to social policies, environment and social issues.

Additionally, Hue requested state budget collection must support the dual target of both containing the pandemic and boosting economic recovery.

Hue suggested that the city should continue providing incentive policies for enterprises to operate efficiently; expand tax revenue and avoid tax base erosion; promote e-commerce and cashless payment.