Asian and Pacific economies: decreases in tax revenue highlight need to broaden tax bases

Unsplash 2018 EU

(Unsplash, 2018)

This article is brought to you in association with OECD.


The fifth edition of Revenue Statistics in Asian and Pacific Economies  – released today – shows that tax-to-GDP ratios fell in most of the 16 Asian and Pacific economies covered by the report between 2015 and 2016 due to a combination of policy reforms and decreasing natural resource prices.

While tax revenues have increased in a majority of Asian and Pacific economies over the last decade, the report finds that only three out of the 16 economies increased their tax-to-GDP ratios between 2015 and 2016 compared to nine in the previous year.

For the first time, Revenue Statistics in Asian and Pacific Economies includes six Pacific Island economies – the Cook Islands, Fiji, Papua New Guinea, Samoa, the Solomon Islands and Tokelau – as well as Australia, New Zealand and Thailand, bringing the total number of countries included in the report to 16. The report is a joint publication by the OECD Centre for Tax Policy and Administration and the OECD Development Centre with the co-operation of the Asian Development Bank (ADB), the Pacific Island Tax Administrators Association (PITAA) and the South Pacific Community (SPC) and the support of the European Union. Revenue Statistics in Asian and Pacific Economies 2018 also includes a special feature that explores the management of taxpayer compliance which varies widely in Asian and Pacific economies.

Tax-to-GDP ratios in 2016 varied widely across Asian and Pacific economies. In the Pacific Islands included in the report, tax-to-GDP ratios ranged from 12.2% in Papua New Guinea to 30.0% in the Cook Islands. All but two Pacific economies had tax-to-GDP ratios above 24% while Australia and New Zealand had ratios over 27%. In comparison, the tax-to-GDP ratios in Asian countries ranged from 11.6% in Indonesia to 30.6% in Japan, with all Asian countries other than Japan and Korea having ratios of less than 19%. All countries in the report had a lower tax-to-GDP ratio than the OECD average of 34.0% in 2016. Scope exists in Asian and Pacific economies to broaden tax bases in order to mobilise higher levels of domestic revenues and to reduce vulnerability to external shocks.

The changes in tax-to-GDP ratios observed between 2015 and 2016 were most pronounced in the Pacific Islands. Fiji, Papua New Guinea and the Solomons Islands experienced the largest decreases (of over 0.9 percentage points) and the Cook Islands recorded the largest increase (of 1.5 percentage points). Most Pacific economies maintained high tax-to-GDP ratios relative to many of the Asian economies covered by the report.

Tax structures differ between the Asian and Pacific economies included in the publication. Across all countries, revenues from corporate income tax (CIT) were high by international standards, ranging between 9.4% of total tax revenue in Samoa and 41.1% of total tax revenue in Malaysia in 2016 (in each case higher than the OECD average of 9.0%). However, with three exceptions, Asian countries generated a higher level of CIT revenues than personal income tax revenues in 2016, whereas the reverse was observed for Pacific economies with the exception of Fiji.

Taxes on goods and services are also an important source of revenues in the Asian and Pacific economies. Where levied, value-added taxes (VAT) played a significant role in the tax revenues of Pacific economies in 2016, accounting for more than 25% of revenues except in Australia and Papua New Guinea. VAT was less significant in Asian countries, generating less than 25% of total tax revenue in all Asian countries except Indonesia.


KEY FINDINGS

Tax revenues as a percentage of GDP

  • In 2016, tax-to-GDP ratios varied across the 16 economies, from 11.6% in Indonesia to 31.6% in New Zealand. Tax-to-GDP ratios in the 16 countries were all lower than the OECD average tax-to-GDP ratio of 34.0%.
  • Six of the eight Asian economies in this publication had a tax-to-GDP ratio lower than 19% in 2016 whereas among the Pacific economies, six of the eight economies included in this publication had a tax-to-GDP ratio above 24%.
  • Nearly two-thirds of the economies included in this publication experienced decreases in their tax-to-GDP ratios between 2015 and 2016.
  • The largest changes between 2015 and 2016 in tax-to-GDP ratios were recorded in Papua New Guinea and the Solomon Islands (decreases of 2.2 and 2.1 percentage points, respectively) and in the Cook Islands and Korea (increases of 1.5 and 1.1 percentage points, respectively).
  • Ten economies recorded increases in their tax-to-GDP ratios between 2007 and 2016 whereas decreases were registered in six economies (Kazakhstan, Papua New Guinea, New Zealand, Australia, Malaysia and Indonesia)

Tax structure

  • In 2016, income taxes were the predominant source of tax revenue for Australia, Indonesia, Korea, Malaysia, New Zealand, Papua New Guinea, the Philippines, Singapore and Tokelau. Among these economies, the share of income tax revenues varied from 31.2% in Korea to 61.5% in Papua New Guinea
  • Taxes on goods and services were the main source of tax revenue in Kazakhstan,Thailand, Fiji, the Cook Islands, the Solomon Islands and Samoa in 2016, contributing between 48.2% (Kazakhstan) and 77.2% (Samoa) of total tax revenue.
  • Within this category, revenue from value added taxes (VAT) ranged from 12.9% of total tax revenue in Australia to 46.1% of total tax revenue in the Cook Islands (the Solomon Islands and Tokelau do not impose VAT).
  • Social security contributions were the principal source of tax revenues for Japan (40.4% of total tax revenues). Social security contributions play a small role in tax revenues for the remaining Asian economies, with the exception of Korea (26.2%) and do not exist in Pacific economies.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Improvements to pension systems have made them better placed to deliver pensions

Track the spread of coronavirus around the world

Trump systematically upsets global order and trade: Where does this end?

GSMA Announces New Keynote Speakers, Event Updates for 2019 “MWC Los Angeles, in Partnership with CTIA”

Coronavirus: Commission offers financing to innovative vaccines company CureVac

What is inclusive capitalism, and why does it matter?

COVID-19 Vaccination Campaigngs: anti-vaccine movement is still a challenge

Security Union: Commission welcomes political agreement on removing terrorist content online

5G is here: PT Expo China 2019 will be held October 31 – November 3, in association with The European Sting

Cultivating mental well-being while tackling food insecurity

Court of Auditors: EU spending infested with errors well above the materiality threshold of 2%

State aid: Commission approves €550 million German support to compensate Deutsche Bahn for damages suffered by its subsidiary DB Fernverkehr due to the coronavirus outbreak

The increasing drug prices in Europe

How to build smart, zero carbon buildings – and why it matters

Here’s how smart construction could transform home-building after COVID-19

Reviewing EU insurance rules: encouraging insurers to invest in Europe’s future

Brexit: An orderly exit is in the interests of both parties

Autumn 2020 Economic Forecast: Rebound interrupted as resurgence of pandemic deepens uncertainty

Employment and Social Developments in Europe review shows diverse impact of COVID-19 crisis

First do no harm. Why healthcare needs to change

A Union that strives for more: the first 100 days

London wants new skyscrapers to protect cyclists from wind tunnels

EU investment budget for 2020: A boost for the climate

Technological innovation can bolster trust and security at international borders. Here’s how

4 ways to deliver social justice during the COVID-19 recovery

Posting of workers: final vote on equal pay and working conditions

Commission welcomes provisional agreement on the European Climate Law

Nitrate pollution of water sources: new impulses for EU Water Policy?

Coronavirus global response: EU Humanitarian Air Bridge to Afghanistan and further support

Commission sets course for an open, sustainable and assertive EU trade policy

Cape Town shows how other cities could limit climate change with new mobility solutions

Fishing rules: Compulsory CCTV for certain vessels to counter infractions

UNICEF calls on supply chain and transport industry to take COVID-19 vaccines to the world

The Commission makes Erasmus+ and European Solidarity Corps more inclusive

Tokyo 2020 Olympics: from cardboard beds to recycled medals, how the Games are going green

Italy and Greece zeroed their fiscal deficits, expect Germany’s response

The new era of Matriarchy?

Early signs of growth in Eurozone?

Yemen update: UNICEF chief condemns attack in Taiz that claims lives of seven children

How robotics can help humanitarians bridge the digital divide

UN chief of peace operations honours fallen Chadian ‘blue helmets’ serving in northern Mali

Can Argentina’s new president save the country’s economy?

Here are 3 lessons Europe can learn from China’s flourishing start-ups

Libya: EU efforts should focus on protecting migrants, MEPs say

UN and civil society team up to make cities more sustainable and inclusive

These are the world’s most positive countries

Data exchanges: Strengthening Europol cooperation with non-EU countries

Here’s what global progress on COVID-19 vaccination looks like

These are the best cities for tech

How to Create a Clear Vision For the Future of Healthcare

A new global platform to unleash entrepreneurs on the world’s toughest problems

Amazon, a pair of shoes and my Data Privacy walks away

UN lauds special chemistry of the periodic table, kicking off 150th anniversary celebrations

Your next pair of sneakers could be made from coffee

Make no mistake: the purpose of business is to serve society

Repairing – not recycling – is the first step to tackling e-waste from smartphones. Here’s why.

7 billion ‘extra’ trees have been discovered in Africa – part of the continent’s ongoing efforts to restore and reforest the land

Coronavirus update: Countries urged to fight ‘controllable’ pandemic

Engaging world’s youth vital to preventing violent extremism, building sustainable peace, UN official tells Baku Forum

‘Pioneering’ former Chilean President Michelle Bachelet officially appointed new UN human rights chief

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: