Circular No. 09/2003/TT-BTC guiding the implementation of certain points on the policy and measures for managing the state budget estimate in 2003

CIRCULAR

Guidelines for implementing certain points on policies and measures
to manage the state budget estimate for 2003

Pursuant to Resolution No. 09/2002/QH11 dated November 28, 2002 of the National Assembly, 10th Session, Tenth Term, regarding the state budget estimate for 2003;

Pursuant to Resolution No. 215/NQ/UBTVQH11 dated December 21, 2002 of the Standing Committee of the National Assembly on the allocation of the central state budget estimate for 2003;

Pursuant to Resolution No. 02/2003/NQ-CP dated January 17, 2003 of the Government on certain policies and key solutions that need to be focused on to implement tasks for economic and social development in 2003;

Pursuant to Decree No. 03/2003/NĐ-CP dated January 18, 2003 of the Government on adjusting salaries, social allowances, and reforming the salary management mechanism;

Pursuant to Decision No. 181/2002/QĐ-TTg dated December 23, 2002 of the Prime Minister on allocating targets and the state budget estimate for 2003;

The Ministry of Finance provides guidelines for certain points on policies and measures to manage the state budget for 2003 as follows:

I. Allocation and assignment of the state budget estimate for 2003:

1. On the classification of revenue sources and expenditure responsibilities of the state budget:

In 2003, continue to stabilize revenue sources, expenditure responsibilities, and the ratio of revenue distribution between the central state budget and local state budgets as in 2002. For Ho Chi Minh City, the revenue distribution ratio shall be implemented according to Decision No. 181/2002/QĐ-TTg dated December 23, 2002 of the Prime Minister.

Starting from 2003, implement a targeted supplementary mechanism from the central state budget to localities instead of the previous investment return (or re-allocation) mechanism based on revenues from land use rights transfer fees, land rental fees, sales proceeds from state-owned housing, agricultural land use tax, forest resource tax, standing tree sale proceeds, the entire or part of water resource taxes from hydropower, lottery revenues, and advertising revenues for television to enable localities to have funds to build infrastructure projects, social welfare projects, develop housing funds, invest in agriculture and rural areas, improve crop and livestock breeds, regenerate forests, invest in reservoir areas, and develop television services. For Ho Chi Minh City, Da Nang, and the provinces of Ba Ria-Vung Tau, Dong Nai, and Binh Duong, apart from the supplementary budget from the central government based on targets and allocations from local budgets to ensure investment levels corresponding to retained (or reallocated) revenues as stipulated in Point 3, Section I, Part A - Table 1 issued with Decision No. 158/2002/QĐ-BTC dated December 24, 2002 of the Ministry of Finance on assigning the state budget revenue and expenditure estimates for 2003.

2. Allocation and assignment of the state budget estimate:

Based on the state budget revenue and expenditure estimates for 2003 assigned by the Prime Minister, ministries, central agencies, provinces, and centrally governed cities must promptly carry out the work of assigning revenue and expenditure tasks to subordinate units and lower-level authorities; this must be completed at the latest by January 2003. In cases where the People's Councils at provincial level have not decided on the state budget estimate, the People's Committees must prepare provisional budget estimates for allocation to ensure implementation at all levels and units.

Along with the assignment of revenue and expenditure tasks, ministries, central agencies, and centrally governed cities have the responsibility to issue specific measures, policies, and guidelines to ensure that subordinate units and lower-level authorities allocate budgets in accordance with the orientation and goals set by higher authorities. Localities are responsible for reporting the results of budget allocation to the Ministry of Finance in accordance with Circular No. 103/1998/TT-BTC dated July 18, 1998 of the Ministry of Finance. If the People's Council has not approved the budget estimate by January 20, 2002, the People's Committee should temporarily report the provisional budget estimate.

2.1. On state budget revenue

From the beginning of January 2003, ministries, central agencies, and centrally governed cities must assign state budget revenue tasks to subordinate units and lower-level authorities, ensuring they are not lower than those in 2002 and guarantee a minimum increase of 5% compared to the state budget revenue estimate assigned by the Prime Minister.

The state budget revenue assigned to subordinate units and lower-level authorities must be based on the specific economic growth potential of the locality, efforts to combat revenue loss and commercial fraud, and national revenue policies.

Starting from 2003, exempt agricultural land use tax within the allotted plot for households to enhance purchasing power, increase investment in production development, and improve living standards. Localities need to strengthen guidance, inspection, and supervision to prevent excessive taxation when the State implements tax exemption policies for farming households.

As of January 1, 2003, adjust the business tax rate; therefore, tax authorities in provinces and cities need to review all businesses operating within their jurisdiction, their actual turnover and income, and classify them appropriately according to Circular No. 96/2002/TT-BTC dated October 24, 2002 of the Ministry of Finance.

To align with the organizational structure of oil and gasoline businesses, starting from January 1, 2003, units must register, declare, and pay oil and gasoline fees into the state budget in accordance with Circular No. 70/2002/TT-BTC dated August 19, 2002 of the Ministry of Finance.

2.2. On state budget expenditures.

To concentrate resources for salary reform, promote administrative reform, and enhance the effectiveness of public administration management, starting from 2003, ministries, central agencies, centrally governed cities, and units need to reasonably arrange expenditure tasks and allocate budgets to implement the new salary system:

Ministries, ministerial-level agencies, government agencies, other central agencies, and localities, in budget allocation, must determine the level and assign the task of saving 10% of regular expenses (excluding salaries and salary-like items) for each administrative agency and public service unit; ensuring it does not fall below the savings level announced by the competent authority. Budgets at all levels shall not retain the 10% savings on regular expenses mentioned above.

Units with revenue (including those that have implemented financial mechanisms under Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government) shall use at least 40% of the state budget revenue retained by the State (with medical fees being at least 35%) to implement additional salary payments; administrative agencies implementing expenditure allocation mechanisms under Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister, with retained revenue sources, must use at least 40% of the retained revenue for additional salary payments.

Local government budgets at all levels shall allocate a minimum of 50% of the increased state budget revenue in 2002 and 2003 to implement the new salary system according to the following principles:

As for the increase in revenue in 2002: Based on the results of state budget revenue collection at each level up to December 31, 2002 and the approved state budget revenue estimate for 2002 by the People's Council (excluding retained revenue sources for investment as prescribed) to determine the amount of increased revenue.

As for the increase in revenue in 2003: Based on the approved state budget revenue estimates for 2003 and 2002 by the competent authority to determine the amount of increased revenue.

After implementing the measures mentioned above and still not having sufficient resources, the state budget (for budget units) and higher-level budgets (for local budgets) shall provide support to ensure the resources for implementing the new salary system in 2003. In cases where the determined salary fund exceeds the actual needs for implementing the new salary system as prescribed, the unit or local budget may be permitted to use the surplus to increase investment and spending on urgent tasks of the unit or locality in accordance with current regulations.

Additionally, during the implementation of the 2003 budget, if there is an increase in revenue compared to the allocated estimate, local levels shall proactively allocate a minimum of 50% of the increased revenue over the 2003 estimate provided by higher levels to create resources for salary reform in 2003 and beyond. Therefore, in allocating and managing the budget, People's Councils at all levels can only allocate additional local budget spending within 50% of the actual increase in revenue over the estimate provided by higher levels.

Based on the sources of revenue and assigned spending tasks, ministries, central agencies, and localities shall reasonably arrange spending tasks, prioritizing funding for development investment, ensuring counterpart funds for ODA projects, investment preparation funds, disaster prevention and post-disaster recovery projects; supplementing capital for state-owned enterprises operating in mountainous areas, coastal regions, and ethnic minority regions; education and vocational training expenses; establishing a health examination and treatment fund for the poor; scientific and technological research expenses; investment in disadvantaged areas...In allocating and assigning budget spending tasks to subordinate units, attention should be paid to:

Starting from 2003, subsidies or free provision of broadcasting equipment to ethnic minorities living in remote and isolated areas will not be implemented, but these funds will be used to support localities in developing radio and television stations in mountainous provinces and ethnic minority regions.

Transfer the implementation of providing free medicine for patients as stipulated in Decision No. 168/2001/QĐ-TTg dated October 30, 2001, Circular No. 941/CP-KTTH dated October 19, 2001, and Decision No. 853/QĐ-TTg dated July 10, 2001 of the Prime Minister to the implementation of health examinations and treatments for the poor from the Health Examination and Treatment Fund for the Poor as stipulated in Decision No. 139/2002/QĐ-TTg dated October 15, 2002 of the Prime Minister. At the same time, transfer the funds already supplemented to provide free medical services for the specified groups as stipulated in Decision No. 168/2001/QĐ-TTg dated October 30, 2001 and Decision No. 186/2001/QĐ-TTg dated December 7, 2001 of the Prime Minister to this fund to implement health examinations and treatments for the poor.

Adequate resources must be arranged to repay maturing debts (loans for infrastructure construction, loans for solidifying irrigation channels, etc.); simultaneously, measures must be taken to strictly regulate, inspect, and monitor borrowing and loan usage in units and lower levels to ensure that loans comply with regulations and are used for their intended purposes and repaid on schedule.

For crop and livestock seed programs and salt production area support programs, localities shall proactively organize implementation within the scope of the local budget based on approved projects by the competent authorities.

Additionally, in 2003, the Central Government will also support localities facing many difficulties in implementing certain tasks and policies. Along with the support from the Central Government budget, localities shall proactively utilize the local budget and mobilize other resources to implement certain tasks such as:

Implementing the mass movement "All people unite to build a civilized lifestyle in residential areas."

Adjusting policy scholarships and social allowances for students from ethnic minority groups at public schools as stipulated in Decision No. 194/2001/QĐ-TTg dated December 21, 2001 of the Prime Minister.

Establishing a health examination and treatment fund for the poor as stipulated in Decision No. 139/2002/QĐ-TTg dated October 15, 2002 of the Prime Minister. In addition to the support from the Central Government budget, localities shall proactively use social security funds and other local budget resources to contribute to the fund in accordance with regulations.

Investing in infrastructure and resolving land for production and housing for ethnic minorities in the Central Highlands and six particularly difficult mountainous northern provinces as stipulated in Decision No. 168/2001/QĐ-TTg dated October 30, 2001, Decision No. 186/2001/QĐ-TTg dated December 7, 2001, and Decision No. 132/2002/QĐ-TTg dated October 8, 2002 of the Prime Minister. Specifically, the resolution of land for production and housing for ethnic minorities in the Central Highlands must be completed in 2003.

Implementing the reform of the general education program for grade 2 and grade 7 as stipulated in Resolution No. 40/2000/QH10 dated December 9, 2000 of the National Assembly.

Implementing the Program to strengthen school buildings from preschool to secondary education to eliminate the practice of three-shift classes and temporary classrooms made of bamboo and palm leaves as stipulated in Decision No. 159/2002/QĐ-TTg dated November 15, 2002 of the Prime Minister.

II. Organization and Management of the State Budget

1. Strengthening Revenue Management and Preventing Revenue Losses:

Implement inspection to classify, determine the level of revenue loss and commercial fraud in each locality and sector. Based on this, take measures to effectively direct combat forces against tax evasion and commercial fraud, focusing on areas with significant revenue losses. Review and grasp the revenue targets, production and business conditions to ensure correct and full collection of revenues as prescribed by Law, especially for non-state economic sectors, determining reasonable collection levels and timely adjustments to suit the production and business conditions of entities in these sectors.

Strengthen the work of inspecting value-added tax refunds, ensuring strict management while creating favorable conditions for businesses to operate, preventing fraud in VAT refunds to embezzle state budget funds, and strictly handling violations, resolutely recovering the state budget for any misappropriated refund amounts.

Implement the Ordinance on Fees and Charges to ensure consistent implementation nationwide.

2. On budget management and operation:

2.1. Ministries, localities, and units must use the budget within the allocated estimates; they may not appropriate, borrow, or lend under any form. In cases where provincial budgets need to mobilize capital for infrastructure investment, they are permitted to mobilize up to a maximum of 30% of the annual basic construction investment budget of the provincial budget.

2.2. Organize the operation of the state budget estimate according to the principle:

For the state budget: If revenue exceeds the estimate, the additional revenue shall be used to reduce the budget deficit, increase debt repayment spending, increase development investment spending, supplement sources for salary reform, increase financial reserve funds, and increase budget reserves to proactively respond to natural disasters and handle urgent tasks arising. In case of significant revenue reduction compared to the estimate, corresponding spending reductions must be made.

For local budgets:

If revenue exceeds the estimate (the portion of the local budget based on the allocation), the additional revenue shall be used to increase debt repayment spending, increase development investment spending, supplement sources for salary reform, increase financial reserve funds, and increase budget reserves to proactively respond to natural disasters and handle urgent tasks arising. Local People's Committees shall develop plans for using the additional state budget revenue to submit to the Standing Committee of the People's Council at the same level (for commune level, report to the People's Council) for review and comments before implementation.

If revenue exceeds the estimate (the central government share), the central government will reward the excess revenue to localities:

For special consumption taxes on domestically produced goods: Reward 100% of the excess revenue over the estimate assigned by the Government.

For export taxes, import taxes, and special consumption taxes on imported goods: Reward 100% of the excess revenue over the estimate assigned by the Government up to 20 billion dong, and 50% of the portion exceeding 20 billion dong, but the total reward shall not exceed 50 billion dong.

For revenue items shared between the central budget and local budgets: Reward 20% of the actual revenue collected and submitted to the central budget in 2003 that is higher than in 2002 (excluding revenue from budget fund usage).

Specifically for Hanoi City, the excess revenue rewards shall be implemented according to the Capital Ordinance No. 29/2000/PL-UBTVQH10 dated December 28, 2000 of the Standing Committee of the National Assembly and guiding documents.

The excess revenue rewards mentioned above shall be used to supplement capital for infrastructure construction, implement important urgent tasks arising locally including rewarding lower-level budgets, and recorded and settled in the 2004 fiscal year budget.

The revenue amount serving as the basis for rewards mentioned above is the actual amount deposited into the State Treasury and distributed according to the allocated ratio. For revenue and expenditure outside the initial budget estimate; surcharges; price differences, and revenue already refunded or reallocated by the central government shall not be considered for rewards.

To have a basis for rewards, localities are responsible for compiling the results of state budget revenue collection up to December 31, 2003 and sending them to the Ministry of Finance before January 31, 2004, and must have confirmation from the tax authority (for special consumption taxes on domestically produced goods), customs (for export tax, import tax, and special consumption taxes on imported goods), and the Department of Finance and Price Control, State Treasury.

If revenue falls short of the estimate, local People's Committees shall develop adjustment plans to rearrange and reduce spending accordingly, focusing on cutting or postponing non-essential tasks,...and submit to the Standing Committee of the People's Council at the same level (or the People's Council at the commune level) for decision.

For some spending tasks guaranteed from certain retained (or reallocated) revenue sources as stipulated in Point 1, Part I of this Circular, based on the targeted supplementary amount from the central budget and the subsequent allocation from the local budget, localities shall independently manage spending on implementing tasks according to the budget estimate. In cases where revenue decreases (allocated in the balanced budget), corresponding reductions in investment spending can be made.

Ministries, central agencies, and localities shall actively balance their budgets to resolve urgent spending tasks arising. In 2003, demands for spending beyond the budget estimates for agencies, units, and subordinates will not be resolved, except in cases of force majeure such as widespread natural disasters causing significant damage exceeding the budget capacity of ministries and localities.

Central and local government budget reserves can only be used to address urgent spending tasks arising, such as post-disaster recovery, famine relief,...

Regarding the management of construction investment, target programs, ministries, local people's committees at all levels, and units need to implement measures to overcome existing issues, paying particular attention to expanding the model of dedicated project management boards to enhance the effectiveness of project management and implement measures:

Review the list of investment projects again, allocate funds only for those projects that have complete procedures as prescribed, prioritize funding for important projects, especially transportation, water conservancy, etc. Financial agencies at all levels need to plan for advance funding from the beginning of the year for essential construction projects, particularly for repairing and building embankments, water conservancy works, disaster prevention, flood control, providing seeds, livestock, and other essential materials for production, ensuring timely support for agricultural activities.

During budget management, closely monitor project progress to allocate funds accordingly. Projects not proceeding according to schedule should adjust and reallocate funds to projects with faster implementation schedules that can be completed but lack sufficient funding, aiming to complete and put the works into use as soon as possible, ending the prolonged allocation and payment of investment funds. Do not supplement funds for work exceeding the budget estimate and additional construction tasks outside the plan.

Strictly implement final settlement of project values according to current regulations. If the deadline is exceeded without settlement, specific responsibilities must be assigned.

Vigorously implement financial mechanisms for public institutions with revenue as stipulated in Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government; expand pilot programs for quota staffing and administrative management expenses for state administrative agencies as per Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister.

3. Implement the policy of thrift, anti-waste, and transparency in finance and state budget:

Strictly implement Directive No. 29/2001/CT-TTg dated November 30, 2001 of the Prime Minister on vigorously promoting thrift, combating waste, and related guiding documents. Review and propose specific thrift measures at localities and units (in meetings, receptions, anniversaries, awarding medals...). In procurement of equipment and assets, follow established standards and regulations. Unit heads bear personal responsibility for using state budget funds for their intended purposes, efficiently and thriftily. State Treasury needs to strengthen supervision over state budget spending to ensure its effective and thrifty use, contributing to curbing and reversing corruption. Promptly and strictly handle violations concluded by inspection, audit, and review bodies. Strengthen the inspection and supervision work of state agencies, people's representative bodies, political-social organizations, and the public over state budget revenues and expenditures, fundraising, and the use of people's contributions, contributing to better grassroots democratic practices.

Strictly implement the system of state budget transparency in all sectors, levels, and units immediately after the 2003 state budget estimates are allocated and the 2002 state budget settlements are approved as per Decisions No. 225/1998/QĐ-TTg dated November 20, 2001 and No. 182/2001/QĐ-TTg dated November 20, 2001 of the Prime Minister and guiding Circulars of the Ministry of Finance.

4. On administrative reform in the field of finance and state budget:

Continue implementing administrative reform in the field of finance and state budget, focusing on several key areas:

Continue implementing the budget disbursement mechanism as prescribed in Circular No. 103/1998/TT-BTC dated July 18, 1998 of the Ministry of Finance and subsequent supplementary and amended documents. Units implementing administrative expenses and public institutions with revenue shall disburse funds according to the method prescribed in Joint Circular No. 17/2002/TTLT-BTC-BTCCBCP dated February 8, 2002 and Circular No. 25/2002/TT-BTC dated March 21, 2002 of the Ministry of Finance.

Where ministries, central agencies, provincial People's Committees, and centrally-administered city committees have plans to pilot budget disbursement based on estimates, they are advised to coordinate with the Ministry of Finance to study and organize implementation.

Organize training for financial managers, focusing on grassroots levels (communes, wards) to enhance their capacity in advisory and financial management functions for commune budgets, contributing to sound financial conditions and grassroots democratic practices.

Establish procedures and methods for controlling expenditures under the quota-based administrative expenditure system and self-financing mechanisms in public institutions with revenue and service hiring in offices.

Improve reporting systems, reorganize information systems to enhance exchange and coordination in information provision.

5. On commune finance and budget:

Strengthen management of commune financial and budgetary activities, ensuring proper and efficient use of raised funds, promoting grassroots democracy. Expand pilot programs for communes to collect certain non-state-owned revenues such as construction investment income, fresh seafood sales, commercial and industrial business operations...

Based on reviewing commune budget debts, localities should develop plans to resolve them decisively, firmly preventing new debts from arising.

III. Implementation Organization

This Circular takes effect during the 2003 fiscal year. Ministries, sectors, provincial People's Committees, and centrally-administered city committees shall base themselves on this Circular to guide relevant agencies, units, and local government levels in implementation./.