Increase domestic tax mobilisation- ADB | Daily News

Increase domestic tax mobilisation- ADB

Domestic tax mobilisation was identified as a key component in mobilising resources for investment. The low levels of tax to GDP were identified as a key constraint to high rates of investment in the economy.

Japanese Finance Minister Tarō Asō said “over-reliance on external debt should be avoided. We should look to increase tax revenues. Many countries have additional room for raising tax revenue.”

Asō identified that the Asia Pacific was the most dynamic region in the world but faces challenges with an ageing population. Japan in line with the ADB remains committed to international tax corporation and assistance to countries to improve domestic tax mobilisation. These sentiments were expressed on 17 September at the ADB Annual General Meeting of the Board of Governors which took place virtually.

The COVID-19 pandemic is expected to reduce tax collection proportionate to GDP and place strain on government spending. Director IMF Fiscal Affairs Department Vitor Gaspar said: “the pandemic is erasing decades of progress especially in South Asia.” Gaspar called for the rebuilding of tax revenue proportionate to GDP. Gaspar added, “we need a committed multi-year program.”

Indonesian Finance Minister Sri Mulyani highlighted the importance of raising domestic tax collection. Mulyani noted that reform would be benefitted by the exchange of experience and expertise regionally and internationally.

Mulyani noted the new complex schemes of tax evasion. Mulyani said “many of the countries are in the same situation. When we are dealing with tax avoidance you are not only dealing with a domestic issue but a cross border issue.”

Director Centre for Tax Policy and Administration OECD Pascal Saint-Amans said that tax is the key to mobilising resources for investment. The ADB remains committed to financing a hub for tax corporation in the region with the OECD, the World Bank, the IMF, and the UN.