You are on page 1of 12

PUBLIC REVENUES TO SUPPORT

SOCIAL PROTECTION AND


SUSTAINABLE DEVELOPMENT GOALS

Yasushi Suzuki
Public Management Specialist (Taxation)
Sustainable Development and Climate Change Department
Asian Development Bank

Disclaimer: The views expressed in this document are the views of the author(s) and do not necessarily reflect the views or policies
of the Asian Development Bank (ADB), or its Board of Directors or the governments they represent. ADB does not guarantee
the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice,
opinion, or view presented, nor does it make any representation concerning the same.

ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
CONTENT
 Developing Asia’s current and future fiscal
space
 Overview of Asia’s revenue systems
 Options to expand developing Asia’s fiscal
revenues
 Measures planned/ under consideration
toward revenue mobilization

ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
Average fiscal balance of selected economies (% of GDP)

Source: ADB Asian Development Outlook 2014 based on the data


from IMF World Economic Outlook database, October 2013.
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
4

Government debt in developing Asia is lower than


the rest of the world
India
Pakistan
Malaysia OECD
Lao PDR
Viet Nam = 108.7
Myanmar
Thailand
Philippines
Armenia WLD
Korea = 80.8
Hong Kong LA
Nepal
Georgia = 52.0
Cambodia DA
PRC
Indonesia = 36.0
Kazakhstan
0 50 100
Source: ADB Asian Development Outlook 2014 based
% of GDP
on the data from IMF Fiscal Monitor, October 2013.
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
5

Asia has comparatively limited revenue base….


% of GDP Tax revenues, share of GDP
35
1990s 2000s
28

21

14

7
Developing Asia Latin America & OECD World
Caribbean
Source: ADB Asian Development Outlook 2014 based on
the data from IMF Revenue Data; ADB Estimates.
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
Progress for some but still a long way to go for many….
Total Tax Revenue (share of GDP), 2015
Tax revenue collections vary enormously,
with a fair few economies below/ around
15% of GDP

Sources: OECD Revenue Statistics, ADB Key Indicators,


and IMF Art. IV Reports.
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
6
Recent times have been difficult for some…..

Economies with
stable or falling
revenues between
2014 and 2016

Sources: OECD Revenue Statistics and IMF Art. IV Reports


ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
Growth and the equity effects of fiscal revenues
 Indirect effect – fiscal revenues funding
expenditures to promote equity
 Direct effect – Revenue source itself an
instrument of redistribution
 Revenue instrument curb activities with harmful
social consequences
 Effective revenue administration has its own
effect to promote equity
- onerous bookkeeping, filing procedures, making more transparent
and efficient business

ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
9

A wide range of options should be explored


 Broaden base for personal income tax and
VAT
 Introduce Increase use of corrective taxes
and nontax revenues
 taxes on property, capital gains, and
inheritance
 Improve collection and tax administration
through ICT
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
10

…..implying a clear need to improve revenue mobilization across all


categories
% of Composition of tax revenues and social contributions,
GDP 2010
30 28.3
Social contributions
25.4
25
8.5 4.8 Property
19.8
20 1.7
3.0 3.0 Indirect
15 1.6
6.3 13.0 Personal income
10 10.1
7.6 Corporate
5 2.3 1.7
2.9 3.7 3.5 Tax revenues and
0 social contributions
OECD Latin America & Developing Asia
Caribbean
Source: ADB Asian Development Outlook 2014 based on
the data from IMF Revenue Data; ADB Estimates.
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
Revenue Mobilisation
Measures Planned/Under Consideration
• Afghanistan- planning for a VAT regime in 2021.
• Bangladesh- VAT reforms in 2017.
• India- New GST in 2017.
• Kazakhstan- lower VAT threshold, raising excises, natural
resources.
• Kyrgyz- natural resources, excise reforms, luxury property tax.
• Lao PDR-strengthening large tax administration, indirect taxes.
• Mongolia- excises on petrol & tobacco, raising PIT rates, review of
tax structure, simplified regime for SMEs, tax expenditures review.
• Sri Lanka- VAT reforms, new Inland Revenue Act to modernise
administrative provisions.
• Vietnam- environmental taxes, unifying VAT, property taxation.
Source: IMF Art. IV reports in 2017

ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
11
Administrative Modernisation Initiatives Underway
Selected Examples
• Kazakhstan (2015-18): Includes comprehensive review of its
structure at all levels, rationalisation of office network, review of
HRM policies, new workforce planning strategy, redesign of
business processes, IT infrastructure redevelopment.
• Cambodia (2014-18): Major reform program including modernising
core business functions, new call centre, increased resources for
taxpayer services, new e-filing and e-payment services, new risk
assessment methods, revamped HRM policies and practices.
• Mongolia (2017-18): Common tax administration legislative
framework; new compliance improvement strategies for large,
medium and small taxpayers and performance monitoring.
• Japan (2015 onwards): Introduction of taxpayer identification
numbering system for all individuals and corporations.
Source: Revenue body reports and IMF Art. IV reports in 2017
ADB–ADBI Regional Inception Workshop: Strategies for Financing Social Protection to Achieve SDGs in DMCs
17-18 May 2018, ADBI Tokyo, Japan
12