TIMES.KY

Cayman Islands, Caribbeanand International News
Thursday, Jan 26, 2023

‘Tax mobilisation’ could repair economic damage from pandemic, Ukraine war

‘Tax mobilisation’ could repair economic damage from pandemic, Ukraine war

Asian Development Bank said on Wednesday that weak revenues and high spending erase fiscal surpluses and expand deficits across developing Asia.
Developing Asia, including China, has room to increase tax revenues to accommodate vast public spending and achieve their sustainable development goals amid slowing growth due to the Ukraine war and coronavirus pandemic, according to a new report.

The Asian Development Bank said in its “Asian Development Outlook 2022” report on Wednesday that weak revenues and high spending can erase fiscal surpluses and expand deficits across developing Asia, which has the potential to raise three to four percentage points of tax incomes from a pre-pandemic average of around 16 per cent of gross domestic product (GDP).

Government debts as average public gross debt increased to 65.3 per cent of GDP in 2021 from 51.9 per cent in 2019, according to the report.

The Manila-based institution, which estimates China’s economy will still grow by 5 per cent in 2022 having opted to not revise down its forecast, said the virus situation is “highly uncertain right now”.

“If the virus spreads to many Chinese cities and the government maintains the very restrictive Covid policy, it can get out of hand while growth in the coming year could be lowered,” said Albert Park, chief economist at Asian Development Bank.

China last month set its GDP growth target for 2022 at “around 5.5 per cent”, which was at the upper end of the market forecast

On Tuesday, the Washington-based World Bank cut its growth forecasts for East Asia and the Pacific to 5 per cent from 5.4 per cent for this year. China’s economy is expected to also grow by 5 per cent this year, down from a previous estimate of 5.4 per cent.

The development lender warned that regional growth could further drop to 4 per cent this year due to ongoing supply chain shocks, rising interest rates in the United States and diminishing growth in China, which accounts for 86 per cent of regional output.

The World Bank also said real income for households in the region will shrink due to inflation and government debt will limit how fiscal policymakers can respond.

“Tax mobilisation can support fiscal repair,” added Park. “Timely fiscal consolidation will be required in many economies to ensure fiscal sustainability.”

The report stated that governments have to make the most of key revenue sources, such as value-added tax (VAT), personal and corporate incomes and property taxes, that are consistent with local priorities and capacities.

VAT rates across developing Asia averaged 11.9 per cent, compared with 15 per cent in Latin America and 19.7 per cent in high-income Organisation for Economic Co-operation and Development (OECD) countries, the Asian Development Bank report added.

“VAT on imported goods can normally be collected at the border, but not for imported digital products delivered directly online to customers,” said Park. “Rising digital commerce in the region needs careful management by tax authorities.”

The region’s top marginal personal income tax rate of around 27 per cent is lower than 40 per cent in OECD countries, according to the report, with the exception of India, Papua New Guinea and China that have their average comparable to OECD or even higher.

“Taxing individuals’ capital income can promote progressivity because [the] wealthy own a disproportionate share of capital,” said Park, adding that there are implementation challenges because offshore assets can help hinder tax enforcement.

The report also suggested that a well-designed property tax with “sufficiently high rates” can bolster revenue for subnational governments because tax liability on “immovable property” is difficult to evade.

Other new income revenues include levying environmental tax like carbon pricing and corrective health taxes on alcohol and tobacco to 0.6 per cent of GDP, the report suggested.
Newsletter

Related Articles

TIMES.KY
Close
0:00
0:00
Prince Andrew and Virginia Giuffre Photo Is Fake: Ghislaine Maxwell
Opinion | Israel’s Supreme Court Claims a Veto on Democracy
Moonwalker Buzz Aldrin Gets Married On His 93rd Birthday
Who’s Threatening Israeli Democracy?
Federal Reserve Probes Goldman’s Consumer Business
China's first population drop in six decades
Microsoft is finalising plans to become the latest technology giant to reduce its workforce during a global economic slowdown
China's foreign ministry branch in Hong Kong urges British gov't to stop the biased and double standards Hong Kong report
Tesla slashes prices globally by as much as 20 percent
1.4 Million Copies Of Prince Harry's Memoir 'Spare' Sold On 1st Day In UK
After Failing To Pay Office Rent, Twitter May Sell User Names
Lisa Marie Presley, singer and daughter of Elvis, dies aged 54
FIFA president questioned by prosecutors
Britain's Sunak breaks silence and admits using private healthcare
Hype and backlash as Harry's memoir goes on sale. Unnamed royal source says prince 'kidnapped by cult of psychotherapy and Meghan'
Saudi Arabia set to overtake India as fastest-growing major economy this year 
Google and Facebook’s dominance in digital ads challenged by rapid ascent of Amazon and TikTok
FTX fraud investigators are digging deeper into Sam Bankman-Fried's inner circle – and reportedly have ex-engineer Nishad Singh in their sights
TikTok CEO Plans to Meet European Union Regulators
UK chaos: Hong Kong emigrants duped by false prospectus
France has banned the online sale of paracetamol until February, citing ongoing supply issues
Japan reportedly to give families 1 million yen per child to move out of Tokyo
Will Canada ever become a real democracy?
Hong Kong property brokerages slash payrolls in choppy market
U.S. Moves to Seize Robinhood Shares, Silvergate Accounts Tied to FTX
Effect of EU sanctions on Moscow is ‘less than zero’ – Belgian MEP
Coinbase to Pay $100 Million in Settlement With New York Regulator
FTX assets worth $3.5bn held by Bahamas securities regulator
A Republican congressman-elect is under investigation in New York after he admitted he lied about his education and work experience.
Brazilian football legend Pele, arguably the greatest player ever, has died at the age of 82.
Hong Kong to scrap almost all its Covid rules
EU calls screening of travellers from China unjustified
US imposes Covid testing for visitors from China
Ukraine President Volodymyr Zelenskyy Addresses Joint Session of Congress - FULL SPEECH
If a country is denied the right to independence by another, it is not in a union. It is in a dictatorship.
Where is Rishi? Chancellor Jeremy Hunt's excuses about the UK's economic challenges just don't make sense
Former FTX CEO Bankman-Fried finally arrested in Bahamas after U.S. files charges
Corruption works: House Financial Services Chair Waters doesn't plan to subpoena her donor, Sam Bankman-Fried, to testify at hearing on FTX collapse
Ronaldo's new contract...
Prince William's godmother resigns honorary royal role after exposing her/their racism
British PM Rishi Sunak pledges further action on strikes to 'protect lives'
Tax fraud verdict again exposes illusion of Trump the master businessman
Tax fraud verdict again exposes illusion of Trump the master businessman.
Double standards: UK lawmakers attack EU chief over Ireland claims
Yellen hints at ‘national security’ probe into Twitter purchase
Elon Musk reinstates Donald Trump's Twitter account.
George W. Bush and Barack Obama will hold back-to-back disinformation conferences
Mission Improbable: Tom Cruise & Queen Elizabeth
Miss Argentina and Miss Puerto Rico are not single anymore
Matt Hancock is back to the jungle
×