An interesting and unresolved question of the Vietnam war pertained to economic “burden sharing.” At appropriations hearings on foreign aid, U.S. congressmen wanted to know if the Vietnamese people were bearing “their share” of the economic burden of the war. This was not an ethical question, but was intended to elicit only the simple response that x percent of the war budget was being financed by Vietnamese taxation and 1 – x percent by U.S. aid.

As seen earlier, witnesses were not able to answer this “simple” accounting question because of the lack of consensus on the foreign exchange value of the piaster. Better answers to this and other questions of Vietnam public finance depend on the kind of information provided in Chapters 9 and 10.

With the situation that prevailed in wartime South Vietnam, it would not have been possible for the Vietnamese to raise sufficient revenues to finance government operations at the expenditure levels recorded. Basically, there were three sources of financing: domestic revenues, deficit (or inflationary) financing, and foreign aid. We have seen that foreign aid was programmed in a way to keep the deficit under control. Foreign aid generated counterpart funds for budgetary use and promoted growth of income that potentially increased the domestic tax base. But foreign aid cannot be counted on to fill the budgetary gap or to fuel growth over an indefinite period.