HÀ NỘI — The Finance Ministry’s proposal that employers pay taxes and social insurance to one agency to simplify things has met with a mixed response.
While the ministry feels that tax and social insurance agencies should be merged to simplify public administration and administrative procedures, opponents say they have vastly different, non-overlapping functions.
The ministry argues that the merger would allow employers to fill tax and social insurance information in one application and send it to one agency, instead of two.
It is also proposing that tax agencies inspect employers on both tax and social insurance issues, thus subjecting them to fewer inspections.
The ministry is collecting public feedback on this and other draft amendments to the Law on Tax Management.
According to the ministry, as of last year, tax and social insurance agencies were respectively overseeing around 600,000 employers and 300,000 enterprises or agencies who have to contribute social insurance for their employees.
Different objectives
Commenting on the Finance Ministry’s proposal, Việt Nam Social Security General Director Nguyễn Thị Minh said that objectives of tax agencies and social insurance agencies were different.
Tax agencies mainly focused on enterprises/employers while social insurance agencies followed employees during their working tenures and retirement until their death, she noted.
Minh stressed that social insurance was not merely a matter of collecting money. It also included advising, instructing, listing, assessing and paying the correct premiums. "This work cannot be transferred to tax agencies," she said.
The deputy head of Social Insurance Department under the Ministry of Labour, Invalids and Social Affairs, Trần Hải Nam, noted that tax agencies did collect premiums on behalf of insurance agencies in some countries, but they were not merged into one.
"When tax agencies help collect premiums, administrative procedures and costs will be reduced, but there are other functions that will still have to be carried out by social insurance agencies," Nam said.
Former Deputy Minister of Labour, Phạm Minh Huân, said a positive impact of the merger would be that tax agencies have information about labour-related costs, so employers would find it difficult to make fraudulent social insurance payments.
Former director of the Institute for Labour Science and Social Affairs, Nguyễn Thị Lan Hương, also said that tax agencies could collect premiums on behalf of social insurance agencies, but they should not be merged.
“Taxes are for the State budget but social insurance is for employees who would benefit later,” she said.
If the agencies were merged, what would happen to health insurance or voluntary social insurance where participants pay the premiums on their own, she asked.
There are three elements in the Vietnamese social security system that employers are required to cover: social insurance, unemployment insurance and health insurance.
For social insurance, employers have to contribute 17 percent of an employee’s salary plus an additional 0.5 percent towards insurance against occupational hazards and accidents and disease insurance fund. Health insurance and unemployment insurance premiums are collected at three and one per cent of the workers’ wages, respectively.
Employees also contribute social insurance, health insurance and unemployment insurance premiums at 8 per cent, 1.5 per cent and 1 per cent of their wages, respectively. — Đức
