Circular No. 16-BTC/NN explains the method for calculating agricultural tax in 1962.

 CIRCULAR
Explanation of the agricultural tax calculation method for 1962

THE MINISTER OF FINANCE

Respectfully submitted to: Administrative Committees of autonomous regions, provinces, and cities

The Council of Ministers has recently issued Decree No. 63-CP on May 26, 1962, amending certain tax calculation, collection, and reduction methods for agricultural cooperatives. Based on Article 5 of the Decree, the Ministry of Finance hereby provides the following detailed explanation:

Previously, to support the cooperative movement and boost agricultural production, the Prime Minister issued several temporary measures for calculating, collecting, and exempting agricultural taxes for agricultural production cooperatives (Decree No. 375-TTg dated October 15, 1959). These measures stipulated that each year, based on the annual yield of land and the number of agricultural households, taxes were calculated for each household member of the cooperative, and the total tax of the cooperative was the sum of the taxes of all household members. For higher-level cooperatives, the cooperative would pay the entire recorded tax amount, while individual members only paid taxes on their privately retained land area. For lower-level cooperatives, members had to pay taxes on their privately retained land area and from 40% to 50% of the land contributed to the cooperative, with the remaining tax being paid by the cooperative. Such tax calculation methods encouraged farmers to join cooperatives and ensured relatively fair contributions during the initial phase of the cooperative movement.

By now, the agricultural cooperative movement in the northern region has largely been completed, with nearly 90% of farmers joining cooperatives, of which approximately 30% have joined higher-level cooperatives. On the basis of new production relations, land is entirely used by the collective cooperative according to its production plan, and harvests are uniformly distributed by the cooperative according to labor.

In many places, the use of land has completely changed compared to before, such as fields previously planted with rice now being used for seedling cultivation, fields dedicated to seedling cultivation now being used for other crops, etc. In some areas, old boundaries have been demolished, and cooperative members no longer recognize their original plots, or for the convenience of production, cooperatives have exchanged land among themselves, etc.

Therefore, regarding agricultural taxation, if the current method continues to be applied, i.e., still using individual households within cooperatives as the tax calculation subjects, it would be necessary to base the calculation annually on the yield of land and the number of agricultural households of each household member of the cooperative. This is a very difficult and cumbersome task in practice.

Starting from this actual situation, the Government has decided to consider the cooperative as the unit for tax calculation, collection, and exemption from now on. Thus, the tax calculation method is more suitable for the new circumstances in rural areas, thereby further enhancing the effectiveness of the agricultural tax policy on production, while also consolidating and developing cooperatives.

On the other hand, although agricultural production has continued to develop and the current yield of land has significantly increased compared to the stable yield since 1958, it should logically readjust the taxable yield. However, in 1962, the Government maintains the policy of continuing to keep the yield stable at the level set in 1958. This yield is only about 60% of the actual yield.

To simplify the work of collecting agricultural taxes, in conjunction with maintaining the old taxable yield, for each cooperative, the Government will continue to maintain the mobilization level of 1961, meaning that the average tax rate of 1961 will be used to calculate the tax for 1962 for the cooperative (the same applies to individual farming households).

Maintaining the mobilization level of 1961 clearly demonstrates the Party and Government's concern for people's livelihoods, while the State ensures the reasonable mobilization of a portion of farmers' income to serve the needs of socialist industrialization. This is an important point in Decree No. 63-CP that needs to be understood by cadres and the public.

Some may think that the new tax calculation method does not take into account changes in the number of agricultural households, which is detrimental to farmers and cooperatives. In fact, in 1958, the Government announced a three-year stability in yields, and by 1961, the yield should have been recalculated at a higher level, but the Government continued to collect agricultural taxes based on the yield stabilized in 1958, while maintaining the 1961 mobilization level, which is reasonable.

Not considering changes in the number of agricultural households in 1962 mainly aims to simplify the tax calculation process, avoiding wasting time for cadres and the public in tax calculations. Moreover, currently, due to cooperatives engaging in various industries and trades, determining who qualifies as an agricultural household in reality is complex and difficult in some cooperatives, as individuals previously specialized in farming, counted as agricultural households, are now engaged in other occupations like lime kilns, livestock breeding, etc., or conversely, individuals previously engaged in other occupations but now participating in cooperatives, ensuring a certain number of working days annually in agricultural production. Therefore, making detailed calculations based on changes in the number of agricultural households is neither practical nor reasonable.

Below, the Ministry wishes to draw attention to specific issues:

1. Regarding the tax calculation, collection, and exemption units.

The State considers the cooperative as the unit for calculating, collecting, and exempting agricultural taxes, no longer using individual households within cooperatives as the tax calculation unit as before. The Cooperative Management Board (both low and high levels) is responsible for fully declaring the total area and yield within the cooperative to calculate agricultural taxes. For the part of the area and yield of land reserved for individual members, the Management Board also declares to calculate taxes together with the cooperative's area. Thus, the recorded tax amount and the tax payable by the cooperative include the tax calculated on communal land of the cooperative (additional paddy fields, reclaimed land, restored land reaching the tax period, etc.), land contributed by members, and land reserved for the cooperative's own use. Members will settle accounts with the cooperative regarding the tax calculated on their privately retained land. For low-level cooperatives, the cooperative directly pays the entire tax amount to the State without dividing the tax burden as before.

When dividing the profits from the farmland, the commune members will settle with the cooperative regarding the portion of tax calculated based on the area reserved for personal use and the amount of tax calculated based on the land contributed to the cooperative, because the cooperative has paid these taxes on their behalf.

The settlement method is as follows:

a) For households and commune members whose farmland area reserved for personal use and contributed to the cooperative in 1962 remained unchanged, the tax that commune members must settle with the cooperative equals the tax that commune members paid in 1961.

Example: In 1961, farmer Mr. B had 5 agricultural population members, annual taxable yield was 2000 kg, tax rate was 16%, total recorded tax for the year was 320 kg, including: Mr. B reserved 1 mu for personal use, taxable yield was 100 kg, taxed at 16%. The tax on the land contributed to the cooperative was 304 kg, Mr. B had to pay 50%, which was 152 kg. Therefore, in 1961, Mr. B paid a total of 152 kg + 16 kg = 168 kg.

In 1962, the area of land contributed to the cooperative and reserved for personal use by Mr. B did not change, so the tax he had to bear remained the same as in 1961, i.e., 168 kg. The cooperative would be responsible for paying all to the State and when dividing the farmland profits, it would deduct from Mr. B's share of the farmland profits.

b) If the area reserved for personal use and the area contributed to the cooperative increased or decreased, then the tax payable by the commune member must be adjusted.

- For land reserved for personal use, take the 1961 tax rate of each household multiplied by the actual annual taxable yield of the area reserved for personal use in 1962.

- For the area contributed to the cooperative, based on the area of land contributed to the cooperative in 1962 still enjoying farmland profits, calculate as follows: multiply the 1961 tax rate of each household by the annual taxable yield of the area contributed to the cooperative in 1962 still enjoying farmland profits to find the tax of that area, and based on the ratio of tax sharing between the cooperative and the commune member stipulated in 1961 to calculate the tax that the commune member must bear in 1962.

Example:

In 1961, farmer A had 4 agricultural population members, total taxable area was 1 muan 2 mu, taxable yield was 1200 kg, tax rate was 13%, recorded tax was 156 kg, of which the tax on 1 mu 5 tu reserved for personal use by Mr. A was 19 kg 500. Regarding the tax on the land contributed to the cooperative:

136 kg 500, Mr. A had to bear 50%, which was 68 kg 250.

Total tax that Mr. A had to bear in 1961 was:

68 kg 250 + 19 kg 500 = 87 kg 750

In 1962: the area reserved for personal use by Mr. A was only 1 mu, yield was 100 kg, and the area contributed to the cooperative, Mr. A only enjoyed farmland profits from 8 mu, the annual taxable yield of these 8 mu was 800 kg. The cooperative will settle the tax that Mr. A must bear in 1962 as follows:

- Tax on the land reserved for personal use:

- Tax on the land contributed to the cooperative:

Specifically, Mr. A's share:

Total 13 kg + 52 kg = 65 kg.

2. Method of calculating tax.

To simplify the tax calculation and reduce unnecessary complications, this year will base the tax calculation for 1962 on the average tax rate of 1961 of the cooperative. This means that cooperatives will multiply the average tax rate of the entire cooperative in 1961 by the current total taxable yield of the cooperative to calculate the tax for 1962.

The Agricultural Tax Departments at the commune level have the responsibility to collect data to calculate the average tax rate of 1961, directly guide cooperatives in declaring, calculating taxes, and establishing tax records for 1962.

Some examples of tax calculation methods:

a) For cooperatives without changes in farmland like the "Quyet Thang" cooperative.

- In 1961, the taxable area was 52 muan including public land and the part of land contributed by commune members for personal use: the taxable yield was 60 tons, recorded tax (sum of all households' taxes and the tax on public land) was 9 tons. The average tax rate was 15%.

- In 1962, the "Quyet Thang" cooperative did not add or subtract farmland or households, and during the inspection process, no additional area was found. Therefore, the basis for calculating tax in 1962 remained the same as in 1961, so there was no need to recalculate the tax in 1962. The recorded tax of the "Quyet Thang" cooperative in 1962 was still 9 tons.

b) For cooperatives with additions or subtractions in farmland like the "Hong Ky" cooperative.

- In 1961:

The total taxable yield of the cooperative (including the annual taxable yield of public land, land contributed by commune members to the cooperative, and the part reserved for personal use by commune members) was 100 tons.

The total recorded tax (including all taxes calculated on all types of land mentioned above) was 14 tons.

The average tax rate was: 14 ÷ 100 = 14%.

- In 1962:

Due to the cooperative planting two muan of abandoned land and finding three muan more during the recent inspection, the total annual taxable yield of 1962 was: 105 tons.

The recorded tax for 1962 was:

c) For large cooperatives formed by merging several small cooperatives, the total recorded tax of 1961 of the cooperatives is divided by the total annual taxable yield of 1961 of the cooperatives combined to find the average tax rate.

Example: The "Thong Nhat" full-village cooperative consists of three small cooperatives newly merged from the winter-spring season of 1962.

- In 1961:

The total taxable yield of the three cooperatives (of all types of land as mentioned above) was 320 tons (including Cooperative No. 1 with 70 tons, Cooperative No. 2 with 130 tons, and Cooperative No. 3 with 120 tons).

The total recorded tax of the three cooperatives (including all recorded taxes calculated on all types of land) was 42 tons (including Cooperative No. 1 with 8 tons 400 kg, Cooperative No. 2 with 18 tons 200 kg, and Cooperative No. 3 with 15 tons 400 kg).

The average tax rate of Cooperative No. 1 was 12%, Cooperative No. 2 was 14%, and Cooperative No. 3 was 12.8%.

The overall average tax rate of the "Thong Nhat" cooperative in 1961 was 42 tons ÷ 320 tons = 13.1%.

- In 1962:

The total taxable yield of the "Thong Nhat" cooperative was 370 tons due to additional plowing of land and discovery during resistance activities.

The tax recorded for the cooperative in 1962 is:

d) For cooperatives newly established in 1962, the tax rate will be based on the total tax recorded in 1961 divided by the total taxable production declared by individual households in 1961 to find the average tax rate in 1961. On this basis, the average tax rate in 1961 will be multiplied by the cooperative's taxable production in 1962 (including the production from the area contributed by members, additional paddy fields, communal land, and individual plots of members) to calculate the 1962 tax for the cooperative.

e) For cooperatives that added or removed members in 1962, when calculating the average tax rate in 1961, the relevant bases should be added or subtracted (taxable production and tax recorded in 1961) of new households joining or leaving the cooperative.

For places implementing the agricultural tax regulations applicable in mountainous regions, the tax calculation will also follow the above method, which means:

a) If there is no change in the land of the cooperative in 1962, the tax recorded for the cooperative in 1962 will be the same as the tax recorded in 1961.

b) If there is a change in the area or production due to adding or removing land, merging small cooperatives into larger ones, or newly establishing a cooperative, the tax for 1962 will still be calculated based on the average tax rate in 1961.

Example: Cooperative Ban Mo, 17 households, 60 agricultural population.

- In 1961:

- Annual production was 24 tons, after deducting the exempted amount of 6 tons, the taxable production was 18 tons.

The tax recorded was 2,200 kg

(including all taxes calculated for communal land, and land contributed by members for their own use).

The average tax rate in 1961 was:

2,200 kg ÷ 18,000 kg = 12.2%

- In 1962:

Due to the recovery of 5 mu of land subject to taxation, the annual production of the cooperative in 1962 is 29 tons, and after deducting the exempted amount of 6 tons, the taxable production is: 23 tons.

The tax recorded for the cooperative in 1962 is:

For the harvest from upland fields at the end of the year, the tax will be calculated according to the current policy. In cases where households or cooperatives were allowed to deduct part of the upland harvest in 1961, the same deduction will apply in 1962, with the remainder being taxed in 1962.

Therefore, in 1962, due to the reasons mentioned above, both in lowland and mountainous areas, the factor of changes in the agricultural population will no longer be considered.

3. Regarding the tax on land reserved for individual members' private use within the cooperative, it will be settled with the members during profit distribution.

Cooperatives (both high-level and low-level) will multiply the 1961 tax rate of each household by the annual production of the reserved land for individual members, resulting in the tax amount that the cooperative has paid on behalf of the member.

4. Method of tax exemption and reduction for agricultural tax.

In cases of natural disasters or crop failures, cooperatives will be exempted or reduced in tax according to the current regulations. Each year, the agricultural tax authority will base the actual harvest on the taxable area of the cooperative. If the actual harvest is less than the taxable production, the cooperative will be exempted or reduced in tax according to Article 6 of Decree 375-TTg dated October 15, 1959.

It should be noted that the actual harvest for tax exemption and reduction calculations only includes the harvest from the taxable area, not the exempted areas. Therefore, to calculate tax exemptions, the actual harvest must be completed before the winter agricultural tax can be settled.

Therefore, around the time of the harvest, the People's Committee and the cooperative management board may estimate the yield of different types of land in the village and cooperative to calculate the harvest for the main season and add it to the actual harvest of the off-season to determine the total actual harvest for the year of the cooperative.

In cases where the actual harvest of the cooperative does not meet the reduction threshold but some plots have been completely lost due to natural disasters, those plots will be exempted from tax according to the white-out system. The amount of tax exempted is calculated by multiplying the average tax rate of the cooperative by the taxable production of the lost plots.

5. For individual farmers.

If there is no change in land in 1962, the tax recorded in 1961 will remain unchanged. If there is an addition or subtraction of land, the 1962 tax will be calculated using the 1961 tax rate of the farmer, following the method used for cooperatives as described above.

The issuance of this decree by the Government to amend certain methods of calculating, collecting, and exempting/reducing agricultural tax aims to simplify the tax calculation process to align with the production relations and organizational structure in rural areas, while ensuring reasonable mobilization of a portion of the income of cooperatives and individual farmers to serve the needs of socialist industrialization. This has a significant impact on the masses and cadres, directly affecting the contributions and production of the people. Therefore, the dissemination, explanation of the policy content, and guidance on implementation need to be given utmost importance.

It is proposed that the provincial administrative committees and municipal districts base themselves on the specific conditions of each locality and the spirit of this circular, develop plans to disseminate and explain the new agricultural tax calculation methods appropriately down to the county, commune, cooperative, and individual farmer levels. Experiences in dissemination should be summarized promptly, addressing thoughts and answering questions for cadres, cooperative members, and individual farmers to ensure unity and determination in effectively implementing the 1962 agricultural tax work and further promoting production tasks.

For places currently applying the agricultural tax regulations in mountainous regions, careful study of the implementation measures of the Council of Ministers' decree in accordance with the actual circumstances of the locality is required. Any difficulties encountered during implementation should be discussed with the Ministry for resolution.