Developing property tax in viet nam an approach from PESTLIED model bachelor thesis of banking and finance

The study focuses on the systematization of the general theories relating to the developing of property tax, criteria for evaluation as well as conditions for the developing of this tax

BANKING UNIVERSITY HO CHI MINH CITY

NGUYỄN LÊ PHƯƠNG TRÂM

DEVELOPING PROPERTY TAX IN VIET NAM:

AN APPROACH FROM PESTLIED MODEL

GRADUATION THESIS MAJOR: FINANCE & BANKING

CODE: 7340201

Ho Chi Minh City, 2021

BANKING UNIVERSITY HO CHI MINH CITY

NGUYỄN LÊ PHƯƠNG TRÂM

DEVELOPING PROPERTY TAX IN VIET NAM:

AN APPROACH FROM PESTLIED MODEL

GRADUATION THESIS MAJOR: FINANCE & BANKING

CODE: 7340201

SUPERVISOR TRẦN NGUYỄN MINH HẢI, PhD

Ho Chi Minh City, 2021

ABSTRACT The bachelor thesis is conducted with topic: ―Developing property tax in Viet Nam:

An approach from PESTLIED model‖ Property tax can be deemed as one of the most

popular options for raising revenue for financing public services This tax has existed in many countries throughout the world and play an integral part in rebuilding community and infrastructure along with the priorities detrimentally affected to the economy In Viet Nam,

―property tax‖ – a fresh concept of original tax that levied on non-agricultural land The concept of property tax is still abstract and has not been concretized in legal documents, except for the tax stipulating on land property In 2018, the Ministry of Finance had submitted a draft of Law on Property Tax to the National Assembly

The study focuses on the systematization of the general theories relating to the developing of property tax, criteria for evaluation as well as conditions for the developing of this tax in Viet Nam through PESTLIED model, including Political, Economic, Sociological, Technological, Legal, International, Environmental, Demographic factors, to address the situation and prospects of developing property tax in the context of related macro factors The thesis presents an overview of property tax development in Viet Nam through (1) presentation of the operating mechanism of property tax; (2) analyzing the current situation

of property tax developing in Viet Nam according to the aspects of factors in the PESTLIED model; (3) reviewing and proposing recommendations for developing property tax in Viet Nam

In conclusions, the author proposes eight recommendations to the government and the Ministry of Finance about each macro aspect to develop property tax in Viet Nam as follows: (1) Considering property tax exemption policies (2) Controlling the market price of real estates and personal income of taxpayers (3) Accelerating the developing of property tax

to reduce immovable speculation in Viet Nam (4) Applying technology in property tax management system (5) Continuing to improve legal framework of property tax (6) Joining the global trend of developing property tax (7) Evaluating impact of natural problems (8) Considering effect of urbanization

COMMITMENT

I assure that the thesis with the subject ―Developing property tax in Viet Nam: An

approach from PESTLIED method‖ is my own research work conducted by author and

under the direct guidance by Supervisor Trần Nguyễn Minh Hải, PhD., a lecturer of Faculty

of Finance, Banking University of Ho Chi Minh City

The data in the thesis are used honestly Research result in this thesis have not been published in any other works If there are any unfaith, all is my responsibility

Ho Chi Minh City, ………

Author

Nguyễn Lê Phương Trâm

ACKNOWLEDGEMENT

After four years studying at Banking University of Ho Chi Minh City, I gained a lot

of knowledge and experience from talented, devoted and enthusiastic lecturers, who always support for students and education development

I would like to express my gratitude to all the lecturers at Banking University Especially, my sincere thanks to Trần Nguyễn Minh Hải, PhD., Lecturer of Faculty of Finance, Banking University of Ho Chi Minh City for the support and guidance of my thesis

Due to time constraints and practical experience, it is inevitable that certain mistakes will be avoided I look forward to receiving your comments and suggestions to improve my topic

Best regards!

LIST OF FIGURES AND TABLES

3.1 Macro factors and selected aspects affecting the developing of

property tax

30

4.3 Comparison between the two commonly used property

LIST OF ABBREVIATIONS

TABLE OF CONTENTS

ABSTRACT i

COMMITMENT ii

ACKNOWLEDGEMENT iii

LIST OF ABBREVIATIONS v

CHAPTER 1: INTRODUCTION 1

1.1 Motivation 1

1.2 Objectives 3

1.2.1 Overall objectives 3

1.2.2 Specific objectives 3

1.3 Research questions 3

1.4 Research subject and scope 3

1.4.1 Research subject 3

1.4.2 Research scope 3

1.5 Research methodology 3

1.5.1 The approach methods 3

1.5.2 Data collection methods 4

1.5.3 Data processing methods 4

1.6 Research contributions 5

1.7 Research framework 5

1.8 Research composition 6

CHAPTER 2: LITERATURES REVIEWS 8

2.1 Property tax and the role of property tax 8

2.1.1 Definitions 8

2.1.2 Characteristics 9

2.1.3 The important role of property tax 10

2.2 Developing property tax 12

2.2.1 Definition 12

2.2.2 The need of developing property tax 13

2.3 Conditions affecting the developing of property tax 16

2.4 Related studies in the world and in Viet Nam 18

CHAPTER 3: METHODOLOGY 25

3.1 The approach methods 25

3.2 Data collection methods 25

3.3 Data processing methods 27

3.3.1 The reason of choosing qualitative methods 27

3.3.2 An approach of PESTLIED model 30

CHAPTER 4: RESEARCH RESULTS 34

4.1 Viet Nam taxation 34

4.2 The reforming of Viet Nam taxation 35

4.3 Property tax and tax regarding properties in Viet Nam 37

4.4 Macro conditions to develop property tax according to PESTILED model 38

4.4.1 Politic factors: The government policies to develop property tax 38

4.4.2 Economic factors: The effect of real estate price increase and GDP per capital growth 40

4.4.3 Sociological factors: The effect of speculation trend 43

4.4.4 Technological factors: The property tax management 44

4.4.5 Legal factors: On processing legal framework 45

4.4.6 International factors: The trend of property tax in the world 48

4.4.7 Environmental factors: The effect of natural problems 50

4.4.8 Demographic factors: The increase of urbanization 52

CHAPTER 5: RECOMMENDATIONS AND CONCLUSIONS 54

5.1 Orientation of developing property tax in Viet Nam 54

5.2 Recommendations 55

5.2.1 Politic factors: Considering property tax exemption polices 55

5.2.2 Economic factors: Paying an attention to the market price of real estates and personal income of taxpayers 56

5.2.3 Sociological factors: Accelerating the developing of property tax to reduce immovable speculation in Viet Nam 56

5.2.4 Technological factors: Applying technology in property tax management 57

5.2.5 Legal factors: Continuing to improve legal framework of property tax 57

5.2.6 International factors: Joining the global trend of developing property tax 57

5.2.7 Environmental factors: Evaluating the impact of natural problems 58

5.2.8 Demographic factors: Considering the effect of urbanization 59

5.3 Conclusions 59

THESIS SUMMARY 62

REFERENCES 66

CHAPTER 1: INTRODUCTION

1.1 Motivation

For a long time, tax plays a key role in financial system of many countries Firstly, the government uses tax to raise revenues for its operations, infrastructure, welfare, and education defense Secondly, the government also uses tax as social engineering to discourage people from antisocial behaviors and the purpose of this is often done heavily taxing the commodity there by increasing its price (Carnell, 2010) According to taxation, there are three basis tax types, including income tax, consumption tax, and property tax Specifically, income tax is imposed on what you earn, consumption tax is levied on what you buy, and the property tax is charged on what you own Among these kinds, property tax

is considered to be the subject of political debate Since 1997s, the role of property in economic improvements was emphasized in the Wealth of Nations (Adam Smith, 1997) Thence, many aspects regarding property are more gradually considerable And the tax levied on property is absolutely not an exception Property tax, sometimes called an ad valorem tax, is a tax on real estate and some other types of property (Orem, 2020) Property taxes are widely regarded as an efficient and equitable means of raising revenue (Norregaard, 2013)

There are 174 of 193 countries applying property tax, real estate tax, house tax, and land tax (WB, 2018) Property tax that levied on limited properties, is aimed at regulating income, limiting speculative behaviors when many people with their potential, collecting assets to occupy, typically housing and land That makes house and land prices higher and higher Therefore, the poor are more difficult to have the opportunity to own houses In terms of property tax, the citizens, even though currently living in their own country, have

to pay property tax on their own properties locating in other foreign countries In France, since 1st January 2018, citizens may be required to pay taxes on properties that are real estate assets which they own worldwide worth more than 1.3 million euros (Quan, 2018) And, this tax in many localities is also the main revenue for the budget spending on schools, hospitals, parks, streetlights, etc

In the world, there are many empirical studies and reports on the developing property tax (Roy & Sally, 2008; Roy & Jorge, 2008; Jorge & Mark, 2008; Slack, 2010; Norregaard, 2013; Kelly, 2013; Harriet, William, & Mary, 2014; Felis, 2014; Roel & Mark, 2018; Anne

& Alejandro, 2020) Although using many different research approaches, the authors as mentioned above pointed out their own conclusions about the role of developing property tax For instance, the property tax is one of the most important sources of revenues for local governments in countries around the world (Slack, The Property Tax in Theory and Practice, 2010) Property taxation is not only full of potential but also full of uncertain as an instrument for bringing revenues and accountability to sub-national governments in developing and transitional countries around the world (Roy & Jorge, 2008)

In Viet Nam as a developing country, the developing of property tax is not only an important factor in the speculative limitation but also a mean for the strategy for fiscal decentralization Property tax has been in existence in Viet Nam for a long time, as non-agricultural land use tax, but this tax merely contributes 0.03 - 0.06% of GDP per year, much lower than other countries in the world In 2018, the tax revenue on property leviable (non-agricultural land and agricultural land) only accounts for 0.036% of GDP and is only regulated for land The low proportion indicates that the revenue growth capacity has not been fully exploited Viet Nam has lost a large amount of revenue from the tax regulated on housing and this is a reason why Viet Nam’s current asset-related tax collection is lower than other countries’ one

However, the concept of property tax is still abstract and has not been concretized in legal documents, except for the tax stipulating on land property In 2018, the Ministry of Finance had submitted a draft of Law on Property Tax to the National Assembly, proposing

a plan to apply a common property tax rate (including land and houses) at 0.4%, however, there is no further official announcement until now Moreover, Viet Nam still lacks studies

on the property tax except that some reports, seminars which were organized to discuss about this kind of tax For these above reasons, within the framework of the thesis entitled

―DEVELOPING PROPERTY TAX IN VIET NAM: AN APPROACH FROM PESTLIED MODEL‖ the study focuses on the systematization of the general theories relating to the developing of property tax, criteria for evaluation as well as conditions for the developing of

this tax in Viet Nam through PESTLIED model, including Political, Economic, Sociological, Technological, Legal, International, Environmental, Demographic factors, to address the situation and prospects of developing property tax in the context of related macro factors

1.2 Objectives

1.2.1 Overall objectives

This study systematically analyses the macro factors as conditions to develop property tax in Viet Nam using PESTLIED approach, thereby proposing some recommendations to develop property tax in tax system reforming process in Viet Nam

1.2.2 Specific objectives

 Determining the factors in PESTLIED that affect the developing of property tax

 Analyzing the influence of PESTLIED factors on the developing of property tax in Viet Nam

 Proposing recommendations in order to develop property tax in Viet Nam

1.3 Research questions

 Which aspects of factors in PESTLIED that affect the developing of property tax?

 How these factors influence on the developing of property tax in Viet Nam?

 What recommendations are concluded about the developing of property tax in Viet Nam?

1.4 Research subject and scope

1.5.1 The approach methods

A range of definitions is included through different views and concepts A variety of theoretical and empirical studies is reviewed that has been concluded

Study based on the acquisition and inheritance of theories as follows:

(i) Theories of tax reform (Marc, 2009; Savina, 2015)

(ii) Property tax theories (Thomas, 2015; Felis, 2014; Slack, 2010; Lamoureaux, 2011) are considered which emphasizes the important role of property tax for local government (iii) Theories of reforming the property tax in developing countries (Kelly, 2013; Roy & Jorge, 2008; Anne & Alejandro, 2020; Anh, 2020) highlight the meaning of property tax in developing countries

1.5.2 Data collection methods

The dissertation uses secondary data collected from empirical studies, written documents, reports, and reliable sources which had been produced by international development agencies such as International Monetary Fund (IMF), World Bank (WB), General Statistic Office of Viet Nam (GSO) updated for the period from 2008 to 2020 on the developing of property tax to consider the impact of property tax as well as the conditions to develop the property tax in Viet Nam, the reform of tax system of Viet Nam from 2008 to

2020

1.5.3 Data processing methods

The research uses qualitative methods to analyze macro factors in the PESTLIED model (Political, Economic, Sociological, Technological, Legal, International, Environmental, Demographic factors) as well as to evaluate the current status and prospects

of developing of property tax in Viet Nam in the context of relevant macro factors The PESTILED model is an extensions of the PESTLE model (Political, Economic, Sociological, Technological, Legal, Environmental, Demographic factors), a strategic management technique that effectively used in the process of determining the influence outside the factors

in the risk management strategy (Rastog & Trivedi, 2016) Concretizely, each factor stands for its criteria

 Political factors address various laws (education, copyright, employment, etc);

 Economic factors affect the state of economy, profits and revenue such as taxes, inflation rates, stock market trend, and others;

 Sociological factors focus primarily on consumers and prospective customers, including buy trends, population rate, education level and social classes;

 Technological factors are levels and advancement in technology that involve communication methods, technological change rates and prices;

 Legal factors include the provisions on consumer, health and safety, and more;

 International factors refer to the status in other foreign countries, overseas tendency, etc;

 Environmental factors mention climate, weather and the ecofriendliness;

 Demographic factors examine information based on age, race, and gender

In this research, the conditions to develop property tax by PESTILED model are specified in:

(i) Political: the government policies to develop property tax;

(ii) Economic: the effect of real estate increase and GDP per capital growth;

(iii) Sociological: the effect of speculation;

(iv) Technological: the property tax management;

(v) International: the trend of property tax in the world;

(vi) Legal: on processing legal framework;

(vii) Environmental: the effect of natural problems;

(viii) Demographic: the effect of urbanization

1.6 Research contributions

 The thesis addresses the importance of property tax in Viet Nam tax system reform

 The thesis presents the PESTILED model in analyzing macro factors influence on developing property tax

 The thesis analyses those factors to develop property tax in Viet Nam

 The thesis proposes recommendations to the developing of property tax in Viet Nam tax system

1.7 Research framework

Step 1: Determine research subject and research object

Research subject: Developing property tax

Research object: analyses the macro factors as conditions to develop property tax in Viet Nam using PESTLIED

approach, thereby proposing some recommendations to develop property tax in tax system reforming process in Viet Nam

Step 2: Theoretical basis and related empiricals

Theoretical basis relating to the developing of property tax

Step 3: Collecting data

Secondary data from international organizations: International Monetary Fund (IMF), World Bank (WB), General Statistic Office of Viet Nam (GSO) and other reliable sources

Step 4: Qualitative analysis

Qualitative method: An approach from PESTLIED model

Step 5: Write a thesis

Main contents:

Revision of a range of theoretical and empirical studies regarding the developing of property tax

Description of the conditions for the developing of property tax in Viet Nam using the PESTLIED model

In-depth analysis of the micro factors in PESTLIED model which affects the developing of property tax

Proposal regarding some recommendations in order to develop property tax in Viet Nam

Figure 1.1: Design of research process

Source: Synthesized by the author

 Chapter 2: Literature reviews

This study systematizes a range of literature reviews and studies about the developing

of property tax The theoretical models which are tax reform theory, theory of developing of property tax are addressed

Besides, this thesis introduces macro factors in the PESTLIED model

 Chapter 3: Research methodology

The thesis introduces the qualitative analysis

The thesis examines aspects of each macro factor in the PESTLIED model which are

applied to analyze their influence on the developing of property tax

 Chapter 4: Research results

This part of thesis analyzes selected aspects of each macro factor in the PESTLIED model that influence on the developing of property tax in Viet Nam

 Chapter 5: Recommendations and conclusions

This section proposes recommendations as policy implication for the developing of property tax in Viet Nam

CHAPTER 2: LITERATURES REVIEWS

2.1 Property tax and the role of property tax

2.1.1 Definitions

Tax forms the biggest part of any government’s resources Base on heightening the value of property, ―property tax" enters society with the function of regulating people’s behaviors in owning, ultilizing property, especially land, buidings and sometimes real estates World Bank (2020) defines property taxes are generally levied on all types of properties – residential, commercial, and industrial, as well as on farm properties Sometimes different categories of property are treated differently This taxes are not always local taxes, and whether they are or are not local, like all taxes they must also be considered from a more perspective From general policy perspective, property taxes may be viewed, depending upon one’s assumptions, the environment in which they are applied, their design and effectiveness, as an equitable and efficient way of raising revenue

According to FAO (2002), property tax is an annual tax on real property It is usually, but not always, a local tax It is most commonly founded on the concept of market value The tax base may be the land only, the land and buildings, or various permutations of these factors For the purposes of this guide, property tax is restricted to annual taxes and excludes one-off taxes on transfers, on realized capital gains or betterment, or on annual wealth taxes

It is claimed that the property tax is a tax on the market value of private property, including land, cars, business inventory, etc Although the property tax is the principal source of revenue for localities, broad consensus has not been reached on the basic issue of whether property taxes are regressive, proportional or progressive (Tax Foundation, 2019)

Most states have moved away from taxing personal property and impose taxes primarily on real property Property tax can act as a tool to manage land use, urban density and expansion, speculations, economic circles and transactions (ITEP, 2011)

In short, though it can have many definite forms, property tax is generally an annual tax charged on the value of real property, which includes (1) immovable property tax such as land and buildings, and (2) personal property that are movable items such as cars, boats, and the value of stocks and bonds

In some of the high-performing countries, the immovable property tax brings in as much as 3 in percentage of GDP in revenues OECD countries Also, revenues average are nearly 4 percentage of GDP in Canada, and account for a significant share of local government spending in the United States (Roy, Jorge, & Joan, 2010) Bahl and Martinez (2008) point out that developing countries many not use the property tax more intensively than OECD countries do, but the rely more heavily on the property tax to finance

subnational government expenditures

A potential and stable revenue for the local government Lower incentive for people to buy a home

Equity and fairness because the property tax forces the

people who own property that they have to pay tax

based on the value of their assets

Financial problems of existing property owners which is the burden for the middle and high income - earners Can help to lower the wealth gap Property investors may get deterred

Property taxes can improve social cohesion

Drop in property prices because the property tax has to be paid each month by the new homeowner, which lead to unfair to current owner

Higher level of safety when the property tax can

contribute to reduce inequality in society, in particular,

to spend more money for the poor and to spend more

money on the police employment, which will prevent

the unlawful behavior and other unpleasant incidents

Property taxes make it harder to get a loan because of the addition amount of property tax shall be paid each month

by the borrower

Important to finance welfare programs Total welfare loss due to the reason that people have to pay

more for tax, especially the average-income family Additional money for public infrastructure, education,

overall health care improvement and technological

progress

May be problematic from a legal perspective

Easy for government to administrate the property of

people in the local area based on the data collected

from the tax administration system

Implies some administrative work such as high administrative costs, not easy to enforce due to the attitude

of the taxpayers and the awareness of people in developing countries

Source: Synthesized by the author from Marvin (2010) and Thomas (2020)

2.1.3 The important role of property tax

 A major component of state tax system

The important role of the property tax in the rapidly expanding urban areas of the developing world is thus a subject that clearly warrants close attention from those concerned with development, decentralization, and the efficient, effective, and equitable provision of local public services (Richard & Slack, 2006) Property tax is a major component of a country's tax system, which always parallelly exists with income tax and consumption tax to cover tax payment possibilities in economy and mobilize financial resources for the state budget (Duyen, 2020) School districts, counties, municipalities, and townships all collect property tax revenue, and it typically accounts for a significant portion of general revenues

in those jurisdictions—particularly for school districts The remaining local government property tax revenue is collected by "special districts," which are specific-purpose units such

as water and sewer authorities (Urban Institute, 2017)

 A major resource of state budget revenue

Recently, in most countries in the world, including developed and developing countries, property tax is one of the indispensable taxes, showing an important role in total budget revenue of economy Typically, figure 2.1 shows the proportion of contribution from taxes, including property tax in OECD and United Kingdom in 2018 Obviously, property tax is one of essential component in taxation of many economies in the world, especially, in the developed economies

Figure 2.1: Source of tax revenue in the United Kingdom and the OECD

Source: OECD (2018)

 Reducing speculation in the access to housing

Besides the role in financing economic development, property tax is aimed at distributing and regulating income, limiting speculative behaviors, encouraging healthy behaviors, bringing good benefits to society by making it costly for speculators Because today, there are a number of people with potentials, collecting assets to occupy, typically housing and land that makes house and land prices higher and higher, and the poor are more difficult to have access to housing Since then, there has been inequality in the access to housing, a very basic human right Additionally, when money is put into speculation, not only does the price increase, but also the capital source for production and business decreases, detrimental to the operational efficiency of the economy Therefore, combating real estate speculation is an urgent issue and the property tax tool on the taxable real estate can be used as a tool against the current situation Taxation of housing will motivate homeowners to use their homes most effectively to generate taxable income or motivate individuals to work out the right investment channel instead of focusing solely on speculation movables

 Ensuring the society justice

Firstly, through regulating the income of high-income people property tax reduce the distinguish between the low-income and the higher one in the fact that people with high incomes often own high-value houses Secondly, property tax policies implement the income regulation from underground incomes or incomes that have not declared for personal income tax calculation Individuals with income from a variety of sources, including legal or illegal income, have many channels for storing assets such as real estates For income that cannot

be controlled for personal income taxation or has no legal basis as illegal income, property tax helps regulate these incomes

 A technique for macroeconomic regulatory management

Moreover, property tax is considered to be a technique for macroeconomic regulatory management The government makes a change in ownerships, the way residents use properties, and investment on properties That helps reach the government goals without carrying out any administrative orders

In short, property tax plays an important role in taxation as a major component and huge contribution in the state budget revenue, and benefits the economy as well as the society

2.2 Developing property tax

2.2.1 Definition

According to research by the United Nations (United Nations - UN) (Bellù, 2011),

"Development" means "an event constitutes a new stage in a changing situation" (event constituting a new stage in a changing situation) or the process of change Without the conditions, ―development‖ is tacitly intended to be a positive or desirable thing When referring to a society or socioeconomic system, "development" often means improvement both in the overall situation of the system and in some of its constituent elements Development can occur as a result of some deliberate action taken by individual agents or by several sovereign agencies to achieve improvement, for example development and investment policies private With this extended definition, "development" is a multidimensional concept in nature, because any modification of a complex system can occur at different parts, at different rates each other and are driven by different forces In addition, the development of one part of the system can also be detrimental to the development of other parts, leading to conflicts and conflicts between goals Measuring growth, i.e., determining whether the system is evolving is an issue that needs to be considered multidimensional in many related aspects "Development" is also understood as qualified and specified in different ways, for example, "economic development" means improving the way of sponsorship and goods goods and services used in (or equal to) the system to create new goods and services to provide additional consumption and/ or investment to members of the system; ―people development‖ is human-centered development, where a focus is on improving the various aspects that affect individuals' well-being and their relationships with society (health, education, interests, abilities, authorize ) (Bellù, 2011)

In the trend of tax system reform in developing countries, the developing of property tax is considered as the form of enhancing taxation in regulating the way people own and use kinds of properties, especially real estates It is mainly because today, the number of

properties as well as the value of assets, especially real estate, is increasing Developing the property tax is to institutionalize the views and policies of the government on continuing to build and to perfect the financial policies for assets and restructure state budget revenues (Duyen, 2020)

2.2.2 The need of developing property tax

Following the important role of the developing property tax, property tax is considered as an intergral part in the trend of reforming taxation, with some benefits in a fully made taxation, ensuring state budget revenue, reducing speculation, regulating the human’s bad behaviours as well as balancing the social communication

For example, property tax is that to generate revenues for funding local public services although it depends on the range of services funded by the tax varied from countries

to countries (William, Gary & Lawrenve, 2012) Therefore, developing the property tax contributes to build a comprehensive tax system, consistent with international practices, and especially of property tax policies is to ensure revenue for the state budget Many economies applied this tax as a technique for the management of property using of organizations and individuals

The operational nature of property tax is to manage the use and ownership of property that are real estates, adjust and limit speculation, and increase state budget revenue in spending pay for social welfare program, infrastructure, security and order and some other forms Hence, developing the property tax is specifically necessary because of the following reasons:

 The developing of property tax creates a stable income for the local government as well as assist the government to manage the properties in an effective way;

 The real estates are allocated more equally and give more opportunities for the poor

to have their own houses and lands, as well as reduce the discrimination between the higher, middle and lower income;

 The property tax limits the speculation when the economy shall be grow rapidly

2.2.3 Theories of developing property tax

Research on the developing of property tax is implemented based on the approaching some theories regarding: (1) Theories of tax reform regarding the developing of property tax

(Roel & Mark, 2018; Roy, 2009; Roy & Jorge, 2008; Slack, 2010; Thomas D, 2015; Oates, 2010; Slack & Richard, 2015; Ethan, 2015; Roy, Jorge & Joan, 2010) (2) Theories of the developing of property tax (Ali, 2017; Bird & Slack, 2001; Bird R.M, 2015; Carnell, 2010; Duyen, 2020; Felis, 2014; Roy, 2009; Slack, 2010)

 Theories of tax reform regarding the developing of property tax

It is believed that redistributing economic power was a desirable objective of tax policy The enactment of tax reform is a highly political process Reformers’ desire to bring about a simpler, more efficient, and ―fairer‖ tax system (Ethan , 2015) The trigger for tax reform is often highly context-specific, originating in fiscal pressures or political changes Increasing tax reform occurs in a globalised world, and is influenced by international forces

At a perspective on revenue assignments, (Jorge & Mark, 2008) gives two fundamental questions: (i) what revenue sources, particularly taxes, should be assigned to each level of government and (ii) how should these arrangement be implemented? Firstly, residents and local government should be encouraged to internalize the marginal costs of providing services and thereby avoid overspending on them Secondly, a good guide to revenue assignments is the previously mentioned rule that autonomous tax sources should be sufficient to fund the expenditure functions, net of conditional grants, by the wealthiest sub-national governments If local governments rely exclusively on their own revenue to finance services, tax competition among sub-national governments may lead them to under provide services, as they cut taxes to attract business In terms of producing property tax, three dimensions have been identified in many literatures (Roel & Mark, 2018; Roy, 2009; Roy & Jorge, 2008; Slack, 2010; Thomas D., 2015; Oates, 2010; Slack & Richard, 2015) The first aspect is which level of government has the right to choose the taxes that a given level of government can impose The second dimension of tax autonomy relates to which level of government can legislate over the definition of tax bases and which level has the authority to set tax rates The last dimension of revenue autonomy refers to which level of government is charged with administering the various taxes

Roel & Mark (2018) emphasize the important role of developing property tax in the trend of reforming taxation, especially in developing economies, which often rely on international support for tax reform Economists and administrators working in these

countries have cited a number of benefits in supporting the ―good tax‖ argument for the property tax (Roy, 2009) There are many ways for local governments to apply an ideal tax

in low-income countries It can act as a benefit levy, which is progressive in its distribution

of burden, and has significant revenue potential Moreover, it is generally available for the local governments and the laws to implement the tax administration as well as the tax policy usually in place Success with the property tax in developing and transition countries lies in structuring it to fit country circumstances, and then having a plan to let it develop into a proper levy on property values

 Theories of the developing of property tax

In most related theories, empiricals regarding the developing of property tax (Ali, 2017; Bird & Slack, 2001; Bird R.M, 2015; Carnell, 2010; Duyen, 2020; Felis, 2014; Roy, 2009; Slack, 2010), the authors figures out that developing property tax plays a key role in local tax system Within long-lasting discussion on the need for the reform of the local financial system in certain European countries, substantial coverage has been given to the system of property taxation

There are several reasons for the poor to be compliant with the tax policy, at least in developing countries These reasons have been divided into two sets: internal and external factors Firstly, the internal factors are concerned with the way property taxes are actually structured, with narrow tax bases and low tax rates, and the way they are administered, with infrequent re- assessments and low rates of collection Secondly, it is attributed for the external factors to be the failure of many developing and transition countries to deepen fiscal decentralization, by, for example, requiring local governments to rely more heavily on own taxes as the marginal source of revenue In light of that, Bahl & Martinez-Vazquez (2008) figure out that the promise of the property tax in many developing and transitional countries

is mainly dependent on the following events that (1) whether there will be further pressure for decentralization; (2) whether the valuation of property can be facilitated by some methods (area-based assessment) and technological developments (computerized mass appraisal or satellite-aided mapping; and (3) whether central governments will give local governments access to other potentially productive tax bases, such as personal income taxes

In conclusion, some theories mentioned above are an intergral part to the research on the developing of property tax, which provides aspects relating and effecting the property tax

in the tax system in each economies

2.3 Conditions affecting the developing of property tax

There are many factors can affect the developing of the property tax which depend on specific regions due to their situations regarding social, economy, policy and legislation The following factors shall be discussed based on PESTILED model includes: (1) politic; (2) economic; (3) sociological; (4) technological; (5) international; (6) legal; (7) environmental;

and (8) demographic

 Politic factors

The property tax policy must be implementable to recognize the best results, in specifically the revenues, the efficiency in asset management and the equity in tax payment obligation According to Kelly (2013), policy choices need to be adopted, cognizant of the institutional and administrative constraints, recognizing that these policy choices be structured to evolve over time in line with improvements in the broader reform environment and administrative capacity Therefore, the government should systematically monitor and periodically adjust the property tax policy options to ensure effective implementation and achievement of the expected revenue, equity and efficiency objectives

 Economic factors

It is pointed out that the economic factors affecting to the developing of property tax involve (1) the increase of house price; (2) the gross domestic product rate; (3) the gross national income rate and (4) the basic lending rate (Gholamreza & Ayesha, 2015) Accordingly, based on Bivariate study, BLR showed positive and significant correlation towards housing price GDP rate and GNI rate showed positive correlation with housing price while the inflation rate has the least influence towards housing price

The affecting on housing price will result directly to the higher property tax, which will influence to the compliance with the tax payment obligation of the people

 Sociological factors

Hoang Anh (2018) shows that immovable speculation trend encourages the developing of property tax in every country In the world of taxed property, the most

common one is real estate such as land, because it is perceived as finite property If a group

of people possess too much of this source, there is no chance for the weaker people Besides, Mark & Mehmet (2010) points out that property price changes base on a range of socioeconomic variables such as percent of population between the ages of 0 and 17, percent

of population between 18-24, percent of population between 25-44, percent of population between 45-64, the marriage rate, the divorce rate, the mortality rate, the birth rate, the rate

of unemployment, etc In detail, they explain that age determines housing demand, and therefore it may effect on property tax value

 Technological factors

Information and communication technology systems are tool which help to administrate the revenue source (Innov, 2008) They can improve transparency in revenue collection, help identify problem areas in terms of arrears and provide the basis for more efficient budgeting Indirectly, they could help improve enforcement, as local administrations are more confident to act against delinquent taxpayers when equipped with higher quality data However, only technology cannot affect directly to the developing of the property tax The technology coupled with effective enforcement from both government and taxpayer can be a recipe to reach this (William, Riël , Chabala, & Mundia , 2019)

 International factors

Property value is assessed in different rates in different countries (OECD, 2013) The rules, policies regarding the property tax as well as the method on the property assessment are different and the developing countries can learn from the developed countries to perfect their property tax system However, it depends on the economy, culture, politic as well as the tax administration to apply the appropriate tax system

In other hand, apart from which the countries can acquire from the other countries as mentioned above, the situation among the countries in the world also has influence on the developing of the property tax For example, the United States - China trade war has affected directly to the economy of the world, which lead to economic crisis for many companies as well as the income of the people Facing with such situation, the government should have suitable amendment on the tax property in order to maintain and develop afterwards (Dorcas

& Alexander, 2020)

 Legal factors

The rules and legislation in every economy contribute to the national organization, management as well as the benefits for the social, including the developing of property tax The changes in law of any nation regarding property taxation and/or other relevant information to property taxation shall affect directly to the obligation to pay tax of the taxpayers For example, a constitutional amendment authorized the classification of automobiles, and the law was changed to integrate the taxing and licensing process The constitutional amendments and the statewide reappraisal made major changes in the composition of the tax base (Fisher, 2006) Therefore, when the property tax base changes, the developing of the property tax changes accordingly

 Environmental factors

Environmental factors play an important role in developing the property tax An increase in the property tax unambiguously decreases both urban sprawl and utility (Song & Yves, 2006) Besides, the property tax suppresses improvements, which in turn reduces population densityand, the tax reduces dwelling sizes, which raises population density and city size would decrease by 0.4% if the property tax increases by 1%

 Demographic factor

The elements in assessing at the market value of the property include population, income, and the level of urbanization The more population is, the more demand for place to live, and thus the higher the real estate assets are Therefore, in some cities with high level of urbanization, housing demand is also increase, then real estate prices go up Furthermore, the different age and the different status of one person shall have willingness in demanding different types of house For example, singles desire for new houses and more rooms of all types less than do married couples As a result, real prices will be affected by changes in willingness to supply as well as willingness to demand (Richard & Patric, 2009)

2.4 Related studies in the world and in Viet Nam

An attempt has been made to present, in brief, a review of previous studies, which have a direct or indirect relevance to this current study This is likely to provide an overview

of the work done on the studies relating to the developing of property tax

Table 2.2: The summary of some previous studies

Topics Scope Theories Methods Results

The Property Tax:

In Theory and

Practice

(Slack, 2010)

Using data Recurrent Property Taxes

as a Percentage

of GDP and Distribution of Local

Government Expenditures, Local Government Tax Revenue derived from OECD, Revenue Statistics 1965 – 2008 and International Monetary Fund

in selected OECD countries

- The Property Tax and Local

Autonomy (Oates, 2010)

- Subnational Revenues: Realities and Prospects (Bird

& Slack, 2001)

Qualitative method Analyzing the factors affect Property Tax:

- Unpopularity

- Inelasticity

- Tax Base Erosion

- Poor Administration Comparison of Property Tax Systems

in selected European countries

- Problem with tax reform is that there is a widespread suspicion

- The success of property tax reform will depend on public education – taxpayers need to understand how their assessments are calculated

- The property tax, at least the residential property tax, is a good tax for local government but there is room to improve the tax and increase the revenues collected Property taxes are difficult to reform, however

- Property tax will never be able to

do the whole job, especially for local governments that are doing more than providing property- related services and where a mix of taxes is appropriate

Qualitative method Using an economic model combine with analyzing aspects regarding property tax: Revenue Performance (GDP), Administration, Taxes on Property Transfers, Rural land taxes, etc

- Property tax revenues in developing countries are stuck at a level below one percent of GDP

- Redefining the property tax so that its revenue yield might be

considerably greater An effective rate equivalent to 1% of total land wealth, this unified property tax could raise revenues of 3% of GDP

The Property Tax in

Developing

Countries: Current

Practice and

Using data from a panel

of 70 countries for

- Theory of public finance: (Roy &

Sally, 2003)

- Theory of

Mixed method Using Property Tax Revenues as a Share

of GDP and total

- Making property taxes work more effectively in developing and transitional countries is a complex challenge

Prospects

(Roy & Jorge,

2008)

1990, 1995, and 2000 derived from World Bank (WB)

property tax: (Bird

R , 2004),

subnational government expenditure of OECD, Developing and Transition countries in the period from 1970s

to 2000s Using OLS, TSLS estimation to determine factors influencing on property taxation

- Propery taxation is not only full of potential but also full of uncertain as

an instrument for bringing revenues and accountability to sub-national governments in developing and transitional countries around the world

- The future of the property tax in these countries is mainly dependent

on four (04) factors: the pace of decentralization, the efficacy of shortcuts to valuation of property, technology catch-up, and the willingness of the central governments to allow local governments to access to the other productive tax bases

2014

- The theory of property tax (Hamilton, 1975)

- The theory of a new tax view (Mieszkowski, 1972;

Slack, 2010)

Qualitative method Analyzing character

& function, lessons from previous studies to give conclusions

It should be assumed that we have to deal with the tax that cannot be a pure benefit tax because when the owners of property want to improve

or expand their own property, it will

be borne with a higher tax and this discouraged from any investment The Incidence of

the Property Tax

and Property Tax

Preferences

(Harriet, William,

& Mary, 2014)

Using data from the Florida Department

of Revenue

on 126,281 single family owners

In 2006

Theory of property tax (Suit, 1977;

as a percent of income, homestead incidence,

- Property tax is regressive The incidence of both the HSE and SOH tax preferences are progressive because the tax savings that they provide are proportionately greater for lower income homeowners Property tax burden is not equally distributed across households with equal incomes

SOH assessment cap incidence

Predicting Tax Incidence and Tax Benefit

of Finance and General Statistics Office in the year 2008 (from 1996)

In Viet Nam

Theory of land value taxation (Roy, 1998) Theory of propery tax ( J.F Linn &

Roy, 1992) (Slack

& Bird, 2004)

Qualitative method Summarize data regarding the revenue from one-event tax source, taxes from real property in the period from 1996 to 2008

Comparing tax rate inside Ha Noi region and in Viet Nam

- A fundamental flaw of the system is the government’s reliance on declining property tax bases Effective tax rates show that the users of the most valuable urban land pay considerably less that those users of lower-value land The property market is maturing in Viet Nam; there is evidence of sales and other transactions Whilst the property registration system may require modernization, there would appear

to be sufficient market evidence upon which to consider a value- based land tax

Census Bureau through years

2006 to 2016

in Australia, Canada, Chile, USA, and OECD

Theory of property tax (Wallis, 2000), (Sepulveda & Jorge , 2012),

(Norregaard, 2013), (Hultquist & Tricia, 2012)

Theory of property tax reform (OECD, 2010) (De Cesare, 2012)

Using OLS regression, Fixed Effects models, Random Effects Model (GDP, Population, Government Transfer, Property Tax Rate,

- Economic and population growth exerts both push and pull effects on tax policy makers

- Property taxation is emerging from demographic trends observed around the world

Based on the experience of other countries to estimates the impact of

Qualitative method with a contact- verification approach by calculation as

- Property taxes range widely across cities in the United States

- Cities will tend to have higher property tax rates if they have high property tax reliance, low property

Census Bureau’s American Community Survey for

2014

assessment limits

by calculating the difference in taxes between newly purchased homes and homes

property tax has six distinct components:

(1) a ―true‖ market value (TMV), (2) a local sales ratio (SR), (3) applicable exemptions that reduce taxable value (E), (4) a statutory classification (5) the total local property tax rate (TR), and (6) applicable property tax credits (C)

values, or high local government expenditures By calculating the effective property tax rate, this report provides the most meaningful data available to compare cities’ property tax burdens

Who Bears the

of Municipal Affairs and Housing

In 2019 in Canada

Theory of property taxes (Bish, 2004) (Fischel, 2001)

Qualitative method Analyzing the property tax, The Causes and Consequences of Higher Tax Rates on Commercial and Industrial Properties, Property Tax Rates and Ratios

- Property taxes play an important role in funding services Canadians rely on every Residents and businesses paying these taxes would benefit from knowing the underlying rationale

of Local Government Finance and Procurement and the GCC

Theory of tax reform (Bird &

Slack, E, 2015) (Ahmad, E & Stern,

N, 2007) (Bird, R

& Slack, E, 2014)

Qualitative method Analyzing tax base and coverage, tax rate, and some aspects regarding property tax

- Communication with the taxpayers must be improved and made effective to keep them informed and educated of their duties and roles in the taxation system

- The councils must be capacitated and safeguarded through clear definitions of policies to implement effective debt collection strategies

The Property Tax

as Hungary, Poland, Romania, Bulgaria, Chile, Denmark

Theory of property tax in United States (1931)

Qualitative method Analyzing some aspects following the structure The Changing Context for Property Taxation, Implications for Tax Structure and Tax Reform

- The introduction of property tax systems challenges countries in transition to adopt new laws and practices that reflect the demands

of market economies and democratic institutions, while at the same time producing quality results at reasonable cost

Source: Synthesized by the author

Through a summary of previous studies, most of the authors affirm the positive role

of property tax and emphasize the importance of the developing of this tax in their locality, despite the different research approaches, time and spaces However, studies often focus on market research in OECD countries without considering the influence and general view of property taxes in developing countries In general, the experiments show that property taxes contribute significantly to the developing of the financial market, economic growth, and also help balance the society and build a civilized and fair living environment Accordingly, the developing of property tax is to ensure the long-term sustainable development of the tax system, ensuring state budget revenues

In Viet Nam, there is still a lack of research related to developing of property tax, especially the macro factors affect on developing property tax in order to show the overview

of conditions to the developing in tax reform As following the empiricals in this research sector, the author applies qualitative method as the same approach that most authors choose

to analyse this research subject In this study, a PESTILED model approach is used to analyze aspects of the macro factors to figure out a view of developing property tax in Viet Nam This approach is very important because of lacking the same research topic that the author used to access officially Therefore, this study conducts to supplement and contribute

to the knowledge system of developing property tax and contribute to the developing of property tax in Viet Nam

Summary of chapter 2

Chapter 2 starts with showing the definitions of property tax as well as its role from three reliable organizations To sum up, property tax is generally an annual tax charged on the value of real property and plays an important role in the reform of tax system, ensure the government revenue, reduce the society discrimination

Then this chapter analyses the developing of property tax, the conditions and factors that affects its developing following the macro conditions in PESTLIED model The chapter also examines various studies which analyze aspects regarding property tax to sum up the experience, in order to provide an empirical foundation to better understand the terms of developing property tax

It is conclude that PESTLIED model offers an useful view and proper method to analyze macro conditions affecting on the developing property tax when the author implements the research on up-to-date information as well as reality in the economy, especially in developing country like Viet Nam

CHAPTER 3: METHODOLOGY

3.1 The approach methods

To achieve the goal of analyzing and presenting the conditions for the developing of the property tax in Viet Nam tax system through the PESTLIED model, thereby determining the level of property tax developing in Viet Nam, this study applies qualitative analysis method as follows:

First of all, the research approaches top-down analytical methods Accordingly, the thesis presents an overview of property tax development in Viet Nam through (1) presentation of the operating mechanism of property tax; (2) analyzing the current situation

of property tax developing in Viet Nam according to the aspects of factors in the PESTLIED model; (3) reviewing and proposing recommendations for developing property tax in Viet Nam

Besides, the research is conducted based on experiences drawn from theories and research mentioned in Chapter 2 Specifically, the theories regarding the importance of property taxes in the current trend of tax system reform in the world, for developing countries is considered to be absolutely necessary (Roel & Mark, 2018; Roy, 2009; Roy & Jorge, 2008; Slack, 2010; Thomas D., 2015; Oates, 2010; Slack & Richard, 2015; Ethan, 2015; Roy, 2009; Jorge & Mark, 2008; Roy, Jorge, & Joan, 2010) Besides, the theories of the formation and developing of property tax support a more specific view of property tax in the economy as well as the aspects affecting the developing of property tax Since then, author selects the basis, as well as the approaches of the experiments in the world to implement this study (Ali, 2017; Bird & Slack, 2001; Bird, 2015; Carnell, 2010; Duyen,

2020; Felis, 2014; Roy, 2009; Slack, 2010)

3.2 Data collection methods

The dessertation uses secondary data collected from empirical studies, written documents, scientific reports, and reliable sources which had been produced by international development agencies such as International Monetary Fund (IMF), World Bank (WB), General Statistic Office of Viet Nam (GSO) updated for the period from 2008 to 2020

There are three reasons for choosing Viet Nam economy to research on developing property tax

Firstly, there is still a lack of research related to developing of property tax, especially the macro factors affect on developing property tax in order to show the overview of conditions to the developing in tax reform

Secondly, property tax is considered as a trend in the reform of taxation and ensuring government budget revenue in the world; in contrast, the tax on property use (non-agricultural land use tax and agricultural land use tax) only accounts for about 0.036% of GDP in Viet Nam in 2018 and is only regulated on land (Duyen, 2020)

Thirdly, there still have not been any legal corridors for property tax in Viet Nam As

a result, Viet Nam may lose a large amount of revenue from tax collection on housing and this is one of the reasons for the lower proportion of Viet Nam current property tax revenue compared to other countries For those reasons, property taxes need to be reviewed to consolidate and refine the tax system, ensure government budget revenue and related social aspects

Therefore, as a developing country, Viet Nam needs to reform a comprehensive tax system in accordance with international practices, while in the world today, most countries are almost collecting taxes on assets that are taxed mainly on land and houses

Since 2008, there are many remarkable events for the developing of Viet Nam economy Greatly, Viet Nam officially joined the World Trade Organization (WTO) Subsequently, Viet Nam faces with experiencing unpredictable changes, continuing to adversely affect the domestic economy, in order to increase the government budget revenue and especially the efficiency of the implementation of WTO commitments Therefore, Viet Nam is focusing on a number of orientations on macroeconomic stability, building and perfecting the overall economic integration strategy, enhancing the training and fostering of people's awareness to develop society that become more civilized and fair in the next time

(Hai, 2018) Meanwhile in the period from 2011 to 2020, Viet Nam is also in the process of implementing the Tax System Reform Strategy The tax policy system has been amended, supplemented, completed and basically covers the sources of revenue that need to be regulated in the economy; uniform and transparent administration of taxes, fees and charges ensures a reasonable level of encouragement, in order to facilitate the promotion of domestic production and contribute to effective macroeconomic management

In particular, a Draft on Property Tax written by the Ministry of Finance of Law to the National Assembly was introduced in 2018 - the last years of the process as a remarkable point and attracted great attention of society However, up to now, there has been no official decision from the National Assembly, while the trend of applying property tax in the process

of perfecting the tax system, ensuring the state budget has been implemented in developing countries

In short, choosing this research time in the period from 2008 to 2020 is extremely proper to analyze the current situation in the Viet Nam economy through macro conditions using PESTILED approach as well as figure out appropriate comments and recommendations for Viet Nam taxation in the next period

3.3 Data processing methods

3.3.1 The reason of choosing qualitative methods

Qualitative research has a long history in sociology and has been used within it for as long as the field has existed (Crossman, 2020) Qualitative research involves collecting and analyzing non-numerical data (e.g., text, video, or audio) to understand concepts, opinions,

or experiences It can be used to gather in-depth insights into a problem or generate new ideas for research (Pritha, 2020)

Qualitative research methods are divided into many approaches:

 Interviewing method means collecting the opinions, views and experiences of the interviewee, the researcher will exploit in a specific way (Dumay, 2011) Conducting in-depth interviews is one of the most common qualitative research methods It is a personal interview that is carried out with one respondent at a time this method provides a great opportunity to gather precise data about what people believe and what their motivations are

(Wood, 2018) If the researcher is well experienced asking the right questions can help him/her collect meaningful data

 Group discussion method allows participants to express their opinions and discuss actively to come up with a consensus on the problem multidimensional calculation under many angles of the collective group The main aim of the focus group is to find answers to the ―why‖ ―what‖ and ―how‖ questions Typically, they are used to explain complex processes (Rosaline & John, 2005) This method is very useful when it comes to market research on new products and testing new concepts

 The case study method aims to evaluate comprehensively and in depth about the research object The object of the case study can be social problems, events, a process, a program or even specific objects such as individuals and organizations In addition to some

of those forms, using qualitative models to study subjects is a strong point of this method (Mirela , 2013) This type of research method is used within a number of areas like education, social sciences

Besides, there are some typical model for qualitative analysis method such as:

 SWOT: stands for Strengths, Weaknesses, Opportunities, and Threats SWOT Analysis

to assess your organization's current position before the decision on any new strategy (Mind Tools Team, 2017)

 McKinsey 7S: a tool that analyzes firm’s organizational design by looking at 7 key internal elements: Strategy, Structure, Systems, Shared Values, Style, Staff and Skills (Tom

& Robert, 1970) The model can be applied to many situations and is a valuable tool when organizational design is at question The most common uses of the framework are to facilitate organizational change, help implement new strategy, identify how each area may change in a future and facilitate the merger of organizations

 PEST (Political, Economic, Social and Technological) is a management method that assist an organization in recognizing and thereby capitalizing on opportunities offered by existing conditions in the business environment (Kenton, 2020) It can also be used for identifying current or possible future challenges, allowing for effective planning of how to best manage these challenges

 PESTLE or PESTEL: formerly known as PEST analysis - a framework or tool used to analyze and monitor the macro-environmental factors that may have a profound impact on

an organization performance This tool is especially useful when starting a new business or entering a foreign market (Pérez, 2016) It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’ s Five Forces to give a clear understanding of a situation and related internal and external factors

 PESTLIED: an extension of the PESTLE model (Politic, Economic, Sociological, Technological, Legal, Environmental), a strategic management technique that effectively used in the process of determining the influence of the factors in the risk management strategy It concludes 8 macro factors for analysis that are Political, Economic, Sociological, Technological, Legal, International, Environmental and Demographic Therefore, this model gives researcher a comprehensive view of research subject, as follow the aspects in those macro factors, especially in an approach to new issues

To sum up, the strength of qualitative research is its ability to provide complex textual descriptions of how people experience a given research issue It provides information about the ―human‖ side of an issue – that is, the contradictory behaviors, beliefs, opinions, emotions, and relationships of individuals Also, according to Family Health International (2020), qualitative methods are also effective in identifying intangible factors, such as social norms, socioeconomic status, gender roles, ethnicity, and religion, whose role in the research issue may not be readily apparent When used along with quantitative methods, qualitative research can help us to interpret and better understand the complex reality of a given situation Additionally, its originally focus on everyday life and people's experiences, qualitative research lends itself well to creating new theories using the inductive method, which can then be tested with further research

In most research in the world, when discussing new issues, innovations and inventions, most of researchers often use this method to clarify the problem in the most effective way Because the "new" nature of research problems is often highly controversial, qualitative research gives readers a new perspective that is both comprehensive from different angles and detailed about the properties of research problem In particular, property tax has been researched for a long time and most studies use qualitative research methods to

provide an easy-to-understand as well as convenient perspective Therefore, this study chooses qualitative research methods as an approach for analyzing

3.3.2 An approach of PESTLIED model

This study applies the PESTLIED model - an extension of the PESTLE model (Politic, Economic, Socilogical, Technological, Legal, Environmental), a strategic management technique that effectively used in the process of determining the influence ousite the factors in the risk management strategy (Rastog & Trivedi, 2016), each factor stands for its criteria The author implements to analyze macro factors in the PESTLIED model (Political, Economic, Sociological, Technological, Legal, International, Environmental, Demographic factors) as well as to evaluate the current status and prospects

of developing of property tax in Viet Nam in the context of relevant macro factors Specifically, the conditions to develop property tax by PESTLIED model are specified as follows:

Table 3.1: Macro factors and selected aspects effecting the developing of property tax

Political Addressing various laws (education, copyright,

The effect of real estate price increase and GDP per capital growth

Sociological

Focusing primarily on consumers and prospective customers, including buy trends, population rate, education level and social classes

The effect of speculation

Technological

Being levels and advancement in technology that involve communication methods, technological change rates and prices

The property tax management

Legal factors Including discrimination laws, antitrust laws,

employment laws, consumer protection laws, etc

On processing legal framework of property tax

International

Refering to the status in other foreign countries, overseas tendency, etc The trend of property tax in the world

Environmental Mentioning climate, weather and the

ecofriendliness The effect of natural problems