Decision No. 861/TTg On certain mechanisms and measures for managing and operating the State budget in 1996

Pursuant to …;

On Certain Mechanisms and Measures for Managing and Operating the State Budget in 1996

To successfully implement the Resolution of the Ninth National Assembly, Eighth Session regarding the state budget estimate for 1996, the Prime Minister decides on certain mechanisms and measures for managing and operating the state budget as follows:

I- GRADATION OF STATE BUDGET MANAGEMENT FOR LOCALITIES:

Pending the promulgation of the State Budget Law, to ensure stable revenue sources and expenditure tasks for localities in the two years 1996-1997, creating conditions for local authorities at all levels to proactively decide their plans and manage their budgets, the current system of gradation of state budget management will be amended and supplemented as follows:

1. Regarding expenditure tasks:

a) Transfer the task of supplementing capital for state-owned enterprises in localities to the central state budget.

b) Supplement some expenditure tasks for local state budgets as follows:

Investment in construction, repair, and upgrading of welfare and social facilities (hospitals, schools, parks, etc.) using lottery revenues.

Provinces with lottery revenues up to 20 billion VND can use the entire amount; provinces with revenues over 20 billion VND can use part of it for investment in construction, repair, and upgrading of welfare and social facilities, while the remainder is used to balance expenditures for education, healthcare, culture, and social affairs in the locality.

Investment in agriculture and rural development using 45% of agricultural land tax revenue from rice cultivation.

Subsidies for water pumping costs exceeding the quota and support for losses in water resource fees.

c) For expenditure tasks not specified in points (1a) and (1b) above, continue to implement them according to the current system of gradation of state budget management.

2. Regarding revenue sources:

a) Local state budget revenues that are retained at 100%, including:

Agricultural land tax;

Land transfer tax;

Property tax;

Land rental fees (excluding rental fees for land and water surfaces for foreign-invested enterprises);

Proceeds from the sale of state-owned houses;

Revenue from granting land use rights;

Lottery revenue;

Business license tax;

Stamp duty;

Property transfer tax;

Other revenues from non-state commercial and service sectors;

Local fees and charges;

Other local state budget revenues (excluding revenues from budgetary funds usage, recovered capital, and other revenues from state-owned enterprises).

b) Local state budget revenues shared according to the general adjustment ratio, including:

Business income tax;

Corporate income tax (excluding corporate income tax of nationwide accounting units);

Personal income tax (excluding personal income tax of oil workers);

Natural resources tax (excluding natural resources tax for hydroelectric power plants in Hòa Bình);

Revenue from the use of state budgetary funds;

c) Supplementary sources from the central state budget: if the local state budget revenues as stipulated in points (2a) and (2b) above cannot meet the assigned expenditure tasks, the central state budget will supplement the local state budget.

d) Revenues from crude oil exploitation activities and other revenues not specified in points (2a) and (2b) above shall be fully remitted to the central state budget.

Maintain stability in the expenditure tasks of local state budgets and the revenues retained by local state budgets at 100% and the general adjustment ratio for revenues in the two years 1996-1997; in cases where significant fluctuations in revenue and expenditure due to external factors affect the budgets at various levels, the Government will consider adjusting the relationship between budget levels.

For localities facing difficulties, the supplementary amount from the central state budget to the local state budget in 1997 will be reviewed and adjusted based on the capacity of the state budget.

II- MANAGEMENT AND OPERATIONS OF STATE BUDGET REVENUE AND EXPENDITURE:

1. Regarding state budget income:

The Ministry of Finance will study reforms in the tax policy system and submit them to the Government for decision in accordance with the National Assembly's Resolution; guide the implementation of revised and supplemented tax laws at the Eighth Session of the Ninth National Assembly; adjust export and import tax rates promptly for certain groups and items in line with trade policies, consumption regulation, and increased revenue for the budget; gradually implement the preferential tariff program (CEPT) for the ASEAN Free Trade Area (AFTA) region based on ensuring budget revenue, reasonable protection of domestic production, encouraging technology transfer and production innovation, expanding export markets, and attracting foreign investment.

Tax and customs authorities will improve revenue collection methods and enhance the effectiveness of the tax collection system; closely coordinate with local authorities to strengthen inspection and supervision to prevent revenue loss, especially in areas with high potential for revenue such as the non-state sector, import and export, foreign-invested enterprises, and real estate. Organize publicity and transparency of tax rates for each business household to enhance voluntary tax payment to the state.

The Ministry of Finance will regulate lottery operations, reduce the highest prize amounts, improve operational forms to curb illegal gambling, and set appropriate revenue targets for lotteries based on local conditions.

2. Regarding state budget expenditure:

Financial agencies will distribute funds evenly throughout the year according to the progress of work (including additional funds allocated from higher-level budgets to lower-level budgets), ending the practice of concentrating disbursements at the end of the year. In cases where revenue has not been collected in time to cover expenditures, the Ministry of Finance will borrow temporarily from the State Bank to ensure timely expenditure according to the plans of ministries, sectors, and localities and must repay within the year. Expenditures already planned and guaranteed by revenue sources must be implemented promptly without arbitrary cuts.

Continue to suspend new construction of office buildings and car purchases for administrative and public service agencies, Party organizations, and mass organizations funded by the state budget. In truly necessary cases, they must be reviewed by the Ministry of Finance and the Ministry of Planning and Investment regarding needs and funding sources before being submitted to the Prime Minister for decision.

State-owned enterprises will independently decide on purchasing small cars with state funds for work purposes according to the current capital management regulations, adhering to the principle of thriftiness advocated by the Party and the State.

The ministries, sectors, localities, and grassroots units shall strictly and effectively implement the Resolution of the National Assembly on thrift, anti-waste, anti-corruption, and anti-smuggling. After receiving the annual state budget expenditure plan, the heads of units must develop a thrift plan to report to the supervising authority, financial agency, and publicize it to all staff members and organizations within their units for implementation; the savings retained by the unit shall be allocated to carry out necessary tasks that have not been met by the initial budget but are practical and effective. The head of the unit shall bear responsibility for expenditures that violate regulations, cause financial losses, and wasteful expenditures.

Expenditures shall only be arranged within the scope of certain revenue sources and within the assigned plan; if revenue does not meet the plan, expenditures must be correspondingly reduced. Expenditures shall not be arranged without guaranteed revenue sources; for systems requiring modification or supplementation that reduce revenue or increase state budget expenditures, the ministries and sectors must carefully study and submit to the competent authorities for issuance and only increase expenditures when there is a guaranteed source; the financial agency shall be responsible for reviewing these cases. During the budget management process, if new legitimate expenditure needs arise, the ministries, sectors, localities, and units must arrange them within the total annual budget allocation limit, including rearranging expenditure tasks, except in cases of sudden natural disasters. For conference, outbound, and inbound delegation expenses already planned, they can only be implemented upon authorization by the competent authority; if the expenses are not fully utilized, they must be returned to the state budget and cannot be transferred to other purposes.

3. Regarding national target programs:

a) The funds for national target programs need to be prioritized for mountainous, border, island areas, and other difficult regions. The Ministry of Finance and the Ministry of Planning and Investment need to coordinate with the managing agencies of the target programs to submit to the Government for decision-making on allocating program funds to each ministry, sector, and locality along with other revenues and expenditures.

The ministries and localities shall conduct appraisals of projects under the assigned target programs and decide on the allocation of funds for implementing the programs within the total allocated budget, reporting to the Ministry of Finance, the Ministry of Planning and Investment, and the managing agency of the target programs for monitoring and management.

b) The financial agency shall prioritize and promptly allocate funds for target programs to ensure project progress. The main agency of the target programs shall cooperate with the Ministry of Finance and the Ministry of Planning and Investment to allocate funds for sectors and localities according to each program, providing guidance, inspection, and supervision to ensure correct expenditure targets and regulations. The People's Committees of provinces and centrally-administered cities shall directly manage, direct, and operate the assigned programs and publicly announce the funding allocation for each target program to facilitate proactive implementation.

c) The managing agencies need to organize evaluations of the implementation results and reorganize target programs. For target programs that are regular tasks of ministries and localities, the funds allocated for these programs shall be included in regular expenditure tasks for the ministries and localities to implement. For localities still facing financial difficulties with insufficient revenue to cover expenditures, higher-level financial agencies must ensure sufficient funds for target programs at the allocated level.

4. The Ministry of Labor, Invalids, and Social Affairs shall lead together with relevant ministries to submit to the Government a subsidy proposal for salary difficulties within the total amount approved by the National Assembly for those who receive salaries and allowances from the state budget and are truly struggling due to low income.

The ministries, sectors, and localities shall focus on directing and strictly managing staffing and salary funds; actively reorganizing staffing and organizational structures to be leaner and more efficient, ensuring effectiveness and improving work efficiency to create a foundation for solving basic salary issues and gradually improving living standards for those receiving salaries and social allowances.

5. During the management process, efforts should be made to increase revenue to increase investment development and expenditure on important tasks not yet allocated in the initial state budget estimate, supplement the Financial Reserve Fund, and reduce the state budget deficit, maintaining the state budget deficit below or equal to 3% of GDP.

6. Management and use of the State Financial Reserve Fund and the State Budget Contingency Fund:

a) The Minister of Finance shall manage the State Financial Reserve Fund based on the principle of preservation and continuous development of the Fund, which may only be temporarily used when the state budget balance encounters difficulties due to seasonal revenue sources not being concentrated in time and must be repaid within the fiscal year.

b) The contingency fund of each level may only be used for urgent expenditures decided by the competent authority based on ensuring the state budget balance approved by the National Assembly.

The authority to decide on expenditures from the State Budget Contingency Fund is as follows:

For the Central Budget Contingency Fund, the Minister of Finance, after consulting with the Minister of Planning and Investment, decides to supplement the budget for ministries and localities for expenditures up to 1 billion VND to address disaster aftermaths, enemy threats, and other urgent needs, or those already planned but insufficiently funded, then reports to the Prime Minister and assumes responsibility before the Prime Minister for such decisions; for expenditures without plans or exceeding 1 billion VND over the plan, submit to the Prime Minister for consideration and decision.

For the use of the local budget contingency fund to supplement expenditures for agencies and units under local management and for lower-level budgets, the financial and price control agency, after consulting related departments, submits to the Chairman of the People's Committee for consideration and decision or implements according to the delegation of the Chairman of the People's Committee.

III- STRENGTHENING THE CONTROL OF STATE BUDGET EXPENDITURE:

The Ministry of Finance shall guide the procedures for disbursing and managing the state budget to ensure that all state budget expenditures are strictly reviewed for formalities before disbursement, fully inspected during and after disbursement, used for their intended purposes, for the correct beneficiaries, effectively, and according to approved budgets; gradually implement direct payments from the State Treasury to suppliers based on the expenditure orders of unit heads, which have been accepted for payment by financial authorities; establish mechanisms to hold individuals accountable financially for decisions that violate regulations and policies.

Starting from 1996, the following procedures for disbursing state budget expenditures shall be implemented:

1. For construction investment and development-related operational expenditures, follow the current procedures and formalities for disbursing construction investment capital.

2. For administrative and operational expenditures, the State Treasury shall make payments according to the following methods:

Expenditures for purchasing equipment, repairs, etc., shall be directly paid to suppliers based on tender records, contracts, vouchers, and invoices that have been approved for payment by the beneficiary units and financial authorities.

For regular expenditures with small amounts, upon request from the units, the State Treasury shall provide provisional advances to beneficiary units within a set amount to allow them to spend according to approved budgets. Beneficiary units shall report actual expenditures to financial authorities and the State Treasury to convert provisional advances into actual expenditures.

3. For special expenditures (security, defense, etc.), the Ministry of Finance shall coordinate with the Ministry of National Defense and the Ministry of Public Security to establish specific regulations to ensure strict management appropriate to the nature and characteristics of each expenditure item.

4. For expenditures to repay domestic and foreign loans of the Government within the scope of the state budget, supplementary funds from higher-level budgets to lower-level budgets, aid, and support for state enterprises, the State Treasury shall make direct payments based on expenditure orders from financial authorities.

For government bond debts issued by the State Treasury, the State Treasury shall make direct payments and settle accounts with the state budget.

IV- IMPLEMENTATION:

1. Provincial People's Committees under the Central Government shall decide on the decentralization of budget management for local levels based on the provisions on budget decentralization set out in Section I of this Decision.

Starting from 1996, implement a stable revenue and expenditure mechanism for each level of budget; do not implement a bonus system for exceeding revenue plans from higher-level budgets for lower-level budgets.

2. In managing and operating local budgets, the Chairpersons of Provincial People's Committees under the Central Government shall have the authority:

To allocate expenditures within the scope of the decentralized stable budget, including the portion of increased revenues that the local budget is entitled to under the regulations.

To impose additional taxes on certain items as prescribed by the Prime Minister.

To collect fees and charges according to the decentralization regulations of the Prime Minister and mobilize the people's contributions to build welfare projects in the locality.

To mobilize various sources of funds as prescribed by the Prime Minister to meet urgent needs for basic construction investments when revenues are insufficient.

3. The Minister of Finance shall guide the implementation of this Decision; Ministers, heads of agencies equivalent to ministries, and heads of government agencies, and Chairpersons of Provincial People's Committees under the Central Government shall guide subordinate units to implement this Decision based on assigned state budget revenue and expenditure tasks, and the management and operation mechanisms for the state budget outlined in this Decision./.