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Saigon Mulls 'Luxury Tax' on Mobile Phones, Tax Cuts for Middle Class

Along with cameras, cosmetics, perfumes, spa services and gaming, Saigon aims to up revenue by increasing the taxes collected on cell phones.

The People's Committee recently sent the Ministry of Finance suggestions for a draft proposal that would bring in more funds from high-income earners. While admitting that mobile phones are not exactly luxury items, the tax would most impact those people who can afford to frequently upgrade to new models. 

Depending on various factors including the total value and amount sold of an item, luxury taxes in Vietnam vary from 10 to 70%. Officials have not announced what the figures might be for the new items to which they are considering adding the tax.

The suggestions come amidst other proposed changes to Saigon's tax system. Most countries have four to eight groups of items not subject to a value-added tax (VAT), which is the standard tax placed on most goods and services. Vietnam has 25 groups that are exempt, which is too many, according to the People's Committee. The normal VAT rate in Vietnam is 5–10%.

With regards to income tax, the city wants to cut taxes for the middle class. Saigon officials also want an environmental tax placed on batteries and pesticides. "The government should monitor to impose environment tax on products and services that have production and consumption processes harmful to the environment," the Committee explained.

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