Circular No. 14-TC/TDT guiding the implementation of the commune budget charter issued pursuant to Decree No. 64-CP dated April 8, 1972 of the Council of Ministers.

CIRCULAR

Guidelines for implementing the commune budget charter issued pursuant to Decree No. 64-CP dated April 8, 1972 of the Council of Ministers

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The Council of Ministers has issued the Commune Budget Charter (Decree No. 64-CP dated April 8, 1972) ^([1]). Based on Article 3 of the aforementioned decree, the Ministry issues this circular to clarify certain points in order to ensure uniformity and appropriateness with local conditions in the implementation of the charter.

I. GRASP THE FUNCTIONS AND RESPONSIBILITIES OF COMMUNE LEVEL STATE ADMINISTRATION AND THE MEANING AND EFFECTS OF THE COMMUNE BUDGET

The Central Committee of the Party and the Government have repeatedly affirmed that the commune level is the grassroots level of the State in rural areas, a very important level that needs to be further consolidated (Resolution No. 29-CP of January 1, 1968 of the Council of Ministers, Resolution No. 197-NQ/TW of March 15, 1970 of the Political Bureau).

As a grassroots level of state administration, communes must fully exercise their functions as organs of power and administrative units of the State in rural areas. The People's Council and the Administrative Committee of the commune must fulfill their duties as representatives of the State and at the same time as representatives of the people, striving to fully perform their tasks and properly use their powers as prescribed by national laws to organize the construction of new rural areas and socialism, maintain public order and security, protect public property, especially regularly pay attention to economic management, cooperative management, and organizing the life of the people as stipulated in Resolution No. 197-NQ/TW of March 15, 1970 of the Political Bureau.

1. Economic Management. Given that our economy in rural areas is collective, at the commune level, the State does not advocate organizing production and business units under full public ownership. The task of the commune-level administration in economic management is to carry out tasks within its authority and functions to create favorable conditions for cooperatives and working people to boost production, successfully complete the assigned state plan tasks, and strictly fulfill their obligations to the State. Specifically:

a) The commune-level administration must effectively perform the task of protecting socialist property, including state property and cooperative property, particularly paying great attention to land management according to Resolution No. 125-CP of June 28, 1971 of the Council of Ministers, ensuring that land is used reasonably and efficiently, without being left idle or lost.

b) The commune-level administration must strengthen labor management, specifically organizing household registration and household registration management carefully, implementing Resolution No. 104-CP of June 27, 1964 and supplementary documents to support cooperative labor management, ensuring military service obligations and labor allocation plans in various sectors of the national economy, identifying those who evade labor and prosecuting them before the law.

c) The commune-level administration must inspect compliance with the cooperative charter, policies, systems, and management in various types of cooperatives: agricultural, trading, credit, handicrafts, etc., particularly financial management and distribution, encouraging and supervising cooperatives to fully and timely fulfill all obligations to the State.

2. Regarding the organization of people's life,the commune-level administration must first perform administrative management well, maintaining public order and security, protecting the property and lives of the people; performing local military work, organizing self-defense militia, air defense evacuation, etc...

A very important task of the commune-level administration both currently and in the future is to continuously develop cultural and social undertakings such as health, sanitation, education, information, postal services, etc., to protect people's health, improve their overall quality, and plan to mobilize and organize the people to build public utility projects such as roads, bridges, markets, ferries, schools, health stations, clubs, libraries, etc.

The commune budget is precisely the financial means to ensure that the People's Council and the Administrative Committee of the commune can implement these tasks in a planned manner.

From the August Revolution to the present, the State has issued many documents specifying the content and structure of commune budgets for the years 1949, 1952, and 1958. Drawing lessons from the implementation of these documents regarding commune budgets, the Ministry of Finance proposed the policy of building commune finances in 1964 and piloted it in many provinces. The effect of the commune finance construction policy was generally good, with many localities tapping into the potential economic capabilities of communes, creating a stable source of income for communes in their own locality, not relying on provincial budgets. However, due to unclear relationships between communes and cooperatives during this period, there were inconsistencies in interests between communes and cooperatives in some places. Furthermore, in the relationship between communes and districts and provinces, there were issues that needed to be clarified more strictly and concretely.

For these reasons, the Council of Ministers issued the new Commune Budget Charter with three objectives:

a) To clearly define the content of the commune budget and the principles of managing the commune budget so that the People's Council and the Administrative Committee of the commune can grasp and use this financial tool appropriately to perform their tasks well, enhance their sense of responsibility and management skills for communal affairs, rely on the strength of the people to accomplish tasks that the commune administration must undertake, avoid bureaucratic paper work, completely depend on the State, or operate in a command style, detached from the masses of the people.

b) To clearly define the relationship between communes and cooperatives, ensuring the correct implementation of the Cooperative Charter and the Commune Budget Charter, ending the situation where communes burden cooperatives with expenses unrelated to cooperative finances, or conversely, allowing cooperatives to occupy public property without contributing anything to the State.

c) Specify clearly the relationship between the commune budget and the provincial or city budget, define the system, revenue, expenditure, subsidies, material rewards, etc., so that the provincial or city budget can focus on the main objectives of local economic development plans, without chasing after scattered expenditures at the commune level. On the other hand, it encourages communes to actively complete all assigned tasks, strive to increase revenue, save expenses, comply with policies and systems, thereby having increasingly abundant financial means to expand public services for the benefit of the people.

II. UNDERSTAND THE NEW ASPECTS IN THE COMMUNE BUDGET REGULATIONS

The regulations have been specific and clear, therefore, below, the Ministry will explain some new points or those whose content differs from current understanding and practice.

1. The commune budget consists of two major parts: regular revenue and expenditure, and non-regular revenue and expenditure.

Regular Expenses These are annual expenditures that every commune must implement to ensure the normal operation of the commune-level administrative bodies. These expenditures are guaranteed by regular revenues according to established policies and systems. After carefully arranging these expenditures, if there is any surplus revenue, it may be transferred to supplement non-regular expenditures.

Non-regular expenditure refers to expenditures aimed at implementing basic construction projects within the new rural development plan of the commune and which the commune must undertake. These expenditures are mainly guaranteed by non-regular revenues such as the previous year's surplus, provincial subsidies, and contributions from the people's labor.

Distinguishing between these two types of expenditure and revenue aims to make the people and officials clearly understand the nature, scope, and extent of each type, thus facilitating clear management, easy comparison from year to year and commune to commune, and convenient monitoring and supervision by the people and higher authorities.

2. Regarding expenditure: it should be noted that the commune budget can only be spent on matters within the responsibilities and tasks of the commune-level administration, while the development of collective economy is carried out by cooperatives with their own capital and state assistance (local government budget or central government budget).

For works related to both collective economy and the common life of the people, such as opening roads within the commune or connecting the commune to the outside, constructing water conservancy projects benefiting multiple cooperatives within the commune, the Commune People's Committee should mobilize the people's labor and the cooperative's contribution to implement them. In cases where these works exceed the commune's boundaries (involving other communes), they must be reported to the district level for decision.

In managing expenditures, the Commune People's Committee must carefully consider and apply standards and norms accurately to ensure the work with the least cost. Every penny of the people's money must be saved, avoiding ostentatious forms and wasteful use of human and material resources. Particularly, no activities such as banquets, receptions beyond the prescribed standards should be organized.

3. Regarding revenue: The most important source of revenue for the commune budget is regular revenue, including fixed revenue, regulated revenue, and subsidy revenue.

a) Fixed revenue mentioned in the regulations refers to revenue from assets managed by the commune and revenue from economic and cultural activities organized by the commune. The commune must develop and exploit these sources of revenue, as they are the main, long-term, and stable sources of revenue for the commune.

Revenue from public property profits: Currently, every commune has public land plots, ponds, lakes, and other public assets such as forests, mountains, rivers, streams, which were not distributed to farmers during land reform and which the state does not have the capacity or conditions to directly manage.

According to Resolution No. 125-CP of the Council of Ministers dated June 28, 1971, agricultural land, ponds, and pastures used for agricultural production shall be handed over to agricultural cooperatives for use under the condition:

- Officially recognized by the state for the right to manage and use the land.

- Using the land for its intended purpose as stipulated by the state and fulfilling obligations to the state according to the prescribed policy.

Therefore, agricultural land, ponds, and pastures are handed over to cooperatives for use and business organization, but cooperatives must allocate a portion of their income to contribute to the commune.

However, considering the specific situation, since 1964, many Commune People's Committees have used commune budget funds and actively mobilized the people to develop these resources, now transferring them to cooperatives, appropriate measures need to be taken to resolve this reasonably.

- For orchards and fish-breeding facilities currently directly managed and generating profits by the Commune People's Committee, the District People's Committee needs to consider all aspects, thoroughly discuss with the commune and cooperative to resolve each case appropriately so that the interests of the cooperative and the commune do not conflict and especially do not harm production. If the cooperative accepts to continue exploiting, the cooperative must ensure the maintenance and development of the production base and return to the commune the costs incurred by the commune, according to the agreed conditions recorded in the contract approved and supervised by the District People's Committee. It is necessary to learn from past experiences where some places adopted bureaucratic and command methods, hastily and simply resolving issues, affecting production and the common interests of the people.

- For other public property profits such as branches, fruits of trees already growing on public land or planted by the commune along roads, embankments, schoolyards, health stations, headquarters, etc., the Commune People's Committee needs to protect, develop, and exploit them.

- As for natural fish in ponds, lakes, and other areas not yet registered by any cooperative, the Commune People's Committee also needs to protect and exploit them because this is also a significant source of revenue for the commune budget.

- For ownerless or unclaimed assets, the commune has the responsibility to oversee and protect them and can only use them if permitted by the Provincial People's Committee.

Ferry fees, market fees These are revenues from public services. The commune must first use the collected funds for building market stalls, public toilets at the market, repairing ferry docks, fixing ferries, purchasing life-saving equipment to protect the lives and property of ferry passengers. The collection levels must be approved by the provincial administrative committee.

Revenues from health services include commissions from selling medicine and profits from producing traditional Chinese medicine at the commune health station, contributions to health services from cooperatives and households outside cooperatives.

This revenue is exclusively allocated for the development of health services in the commune.

Main educational service revenues consist primarily of tuition fees for kindergarten classes, while primary and secondary school tuition fees require the commune to supervise parents' associations to ensure full and timely payment to the provincial or municipal budget.

Revenues from other public services such as electricity and water supply (some communes have begun providing these services), broadcasting, and cultural performances according to regulations set by the provincial administrative committee.

Profits from commune trading cooperatives according to state regulations. This revenue aims to encourage communes to support cooperative management and business operations. For other types of cooperatives, the Ministry will study and propose regulations to the Council of Ministers.

Other fixed revenues not included in the above categories, such as depreciation fees for communal facilities lent out, administrative fee charges (household registration, personal history, marriage registration fees...), although they may not be large, communes need to pay attention to collecting them for use in organizing repairs of communal facilities or issuing administrative documents in a dignified manner befitting their status as a level of state administration in rural areas.

b) Adjusted revenues are revenues from various taxes delegated by higher authorities to the commune for collection and submission to the state, but with a portion adjusted back to the commune budget. This source of income serves to motivate communes to strive to exceed provincial tax collection plans and supplement commune revenue, helping to balance commune income with regular expenditures.

Based on current state policies and pricing systems, adjusted revenues include:

- Agricultural tax, with a general adjustment rate for the entire province of 13%. The provincial and county administrative committees will determine specific rates for each commune based on its wealth or poverty, ensuring that the commune budget receives a minimum allocation (no less than 7% of actual agricultural tax revenue) and transferring it entirely to the commune without retaining any part at the county or provincial level.

- Industrial and commercial taxes collected at the commune level, the commune administrative committee assists the county finance department in collecting taxes on agricultural products subject to these taxes, produced on orchard land or on plots of land, 5% tax on itinerant trade (taxes collected at the source and from passing through the commune without prior tax payment), corporate and small household income taxes, and agricultural cooperative income from industrial and commercial activities within the commune, submitted to the state under the guidance, supervision, and encouragement of the county finance department. The commune budget receives an adjustment rate on industrial and commercial taxes collected by the commune. The adjustment rate for the commune is determined by the provincial administrative committee for mountainous regions (from 20 to 25%) and central and plain regions (from 10 to 15%) of the actual tax revenue.

The principle is that after the commune submits 100% of the industrial and commercial taxes collected during each period to the provincial budget, the province will allocate the commune's share based on the predetermined adjustment rate.

Slaughter tax: for slaughtered animals in the commune, the commune collects and allocates a portion to the commune budget according to the current slaughter tax system. For animals handed over to state commerce for purchase and slaughter (including those sent to the central government and those retained for local consumption), the commune budget receives a fixed allocation as specified in Point B, Section III of Circular No. 01-TC/TT dated January 5, 1965, issued by the Ministry of Finance.

The responsibility of the commune administrative committee regarding adjusted revenues is to ensure the fulfillment of the provincial tax collection plan and strictly adhere to state tax policies and regulations.

Regarding the revenue from bonuses for delivering agricultural products to the state, the provincial administrative committee will establish reward systems based on the following principles:

- If the commune completes the plan for purchasing and delivering agricultural products to the state (by value and key items), the commune will receive a bonus calculated as a percentage of the total value of delivered goods;

- If the commune exceeds the plan for purchasing and delivering goods, it will receive an additional bonus calculated as a percentage of the value of goods exceeding the plan.

The criteria for rewarding are the commune's effectiveness in supervising and implementing the plan for purchasing and delivering agricultural products, confirmed by relevant departments and the county administrative committee.

c) Subsidies are revenues provided by the provincial budget to the commune budget. It is necessary to distinguish between regular subsidies and special subsidies.

- Regular subsidies include:

a) Subsidies to ensure payment of salaries for commune staff according to state regulations. Since many commune budgets are still limited, this subsidy remains necessary.

b) Subsidies to balance the budget for extremely poor communes where fixed and adjusted revenues do not cover the minimum regular expenses of the commune.

The goal is for the commune budget to increase revenues and reduce expenditures to balance regular income and expenses, eventually eliminating the need for provincial subsidies.

- Special subsidies are subsidies provided by the province to the commune for constructing projects of political significance for the commune or surrounding communes, such as schools, health stations, bridges, roads, etc.

These special subsidies are non-recurring revenues recorded in the commune budget, but upon completion of construction projects, separate settlements must be made with the funding agency.

III. ACTIVELY PREPARING TO ORGANIZE THE EFFECTIVE IMPLEMENTATION OF COMMUNE BUDGET REGULATIONS

The budget system for communes has been in existence for a long time, but to date, among nearly 6,000 communes in the northern region, only more than 40% can be considered to have implemented a relatively well-established system; in other places, the reality is still a system where the county decides each item of expenditure for the commune. Therefore, organizing the implementation of the new commune budget charter is not a continuation of the old system with new explanations, but a new understanding of the position, responsibilities, and tasks of the commune-level administration and about the significance and impact of the commune budget in consolidating our government in rural areas, in exercising the people's right to self-governance right where they live, it requires thorough and meticulous preparation.

To ensure that the implementation of the Commune Budget Charter fully achieves its intended effects and meets the requirements set forth, at all localities, the Provincial People's Administrative Committee, County People's Administrative Committee, and relevant specialized departments need to organize a thorough study of the charter, linking it to local conditions, analyzing all advantages and difficulties, from which to propose policies and measures to implement the charter. The Department of Finance has the responsibility to monitor the situation, prepare necessary documents, draft plans for implementation... and proactively propose to the Provincial People's Administrative Committee, city administrative committees all matters that need to be done in accordance with local circumstances.

a) In provinces that have had a relatively good movement to build commune budgets before, after thoroughly grasping the spirit and content of the new charter, the Provincial People's Administrative Committee, city administrative committees need to promote specific preparatory work such as: studying and promptly issuing regulations and guidelines on standards and norms for administrative and public service expenditures at the commune level so that communes have a basis to uniformly prepare budget projects. On the other hand, officially establish systems for collecting fees for boat and market operations, administrative documents... and formulate policies to address specific issues related to the revenue side of the commune budget, such as land use issues, the responsibilities and benefits of communes in directing the collection of commercial and industrial taxes, the purchase and delivery of agricultural products... to bring the management of commune budget revenues into a regular system.

The principle of unifying all income and expenditure items in the commune budget must be strictly enforced because only by doing so will the commune budget reflect all activities serving the interests of the people in the commune, truly making the commune People's Administrative Committee the grassroots level of government, and helping commune cadres gradually improve their management skills; finally, it creates conditions for the people to check the work of the government, prevent arbitrary actions by cadres, abuse of power, and embezzlement of public funds. However, due to different conditions in each locality and significant disparities in current management levels of communes, the Provincial People's Administrative Committee must base its guidance on specific circumstances to implement this unification principle step-by-step in line with local conditions.

An important matter but often not given sufficient attention is actively preparing material means for implementing the charter, such as printing and distributing sufficient accounting books and documents according to the new system, improving the organizational structure of the commune financial apparatus as well as the budget management apparatus at the county and provincial levels, training and enhancing the capabilities of specialized budget cadres at all levels, widely disseminating the new commune budget charter among cadres and the people... The Ministry will print and send to the provinces a set of materials including Decree No. 64-CP of the Council of Ministers, the Commune Budget Charter, the accounting system for commune budgets, and guidelines on how to prepare budget estimates and final accounts. Provinces that need these materials and the number required should immediately submit a plan to the Ministry (General Budget Planning Office) for printing and distribution.

Once all preparatory work is completed, it is necessary to organize meetings with key cadres from the County People's Administrative Committee, Commune People's Administrative Committee, and related sectors to ensure that these cadres fully understand the significance, purpose, and content of the commune budget, commit to overcoming difficulties, strictly implement the new system, grasp the sequence of tasks to be carried out, and anticipate ways to handle specific issues arising during the organization and implementation of the commune budget system.

The Ministry will coordinate with several provinces to draw lessons from organizing these meetings.

After the dissemination of the charter, the province needs to direct pilot programs in some communes in each region to take the lead and timely disseminate experiences to other communes.

In summary, this work must be carried out urgently, but it must follow a certain sequence, with specific plans at each step, a schedule for each period, and cannot be rushed or done in a haphazard manner.

b) In places where the movement to build commune budgets is weak,: after the Provincial People's Administrative Committee organizes the study of the charter, discussions on policies and directions for implementation at the local level are needed. Subsequently, cadres should be sent down to the grassroots level to investigate and collect data to assist the Provincial People's Administrative Committee in formulating detailed plans for implementation in each county, while preparing drafts of necessary regulations on standards and norms for expenditures, revenue systems, etc... This cadre team may also be tasked with directing pilot programs in a few communes to draw lessons.

c) Specifically in mountainous provincesAccording to Article 3 of Decree No. 64-CP, the Provincial People's Administrative Committee needs to study how to apply this charter appropriately to communes in mountainous areas, especially regarding the content of expenditures and revenues, including important aspects for mountainous regions such as revenue from forest protection or border trade management... The Ministry will dispatch cadres to cooperate with the Regional People's Administrative Committee and some provinces to study these issues and report to the Council of Ministers for decision.

Finally, it is requested that the Provincial People's Administrative Committee, city administrative committees send to the Ministry a draft plan and schedule for organizing the implementation of the Commune Budget Charter, before October 31, 1972, so that the Ministry can coordinate the work. Provinces that have already started implementing the new system should submit a report on the progress of the work to the Ministry within the same deadline.