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Buoyant or Sinking? Tax Revenue Performance and Prospects in Developing Asia

Samuel Hill (sam.hill@outlook.com.au), Yothin Jinjarak and Donghyun Park
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Samuel Hill: World Bank

No 656, ADB Economics Working Paper Series from Asian Development Bank

Abstract: How did developing Asian economies perform with respect to tax revenue mobilization before and during the coronavirus disease (COVID-19) pandemic? An analysis of data from developing Asia suggests that both short-run and long-run tax buoyancies, a measure of how tax revenue responds to gross domestic product (GDP), were close to one before COVID-19, which is indicative of fiscal sustainability. COVID-19 had a negative impact on the region’s GDP and thus its tax base, and spurred significant fiscal stimulus including tax measures. At a regional level, the pandemic subtracted a tenth of a percentage point from tax revenue growth after controlling for changes in GDP. Using estimated economy-level tax buoyancy coefficients, a counterfactual analysis is undertaken to estimate excess tax revenue losses in 2020 because of COVID-19. The average GDP-weighted excess tax revenue loss is about half a percentage point of pre-pandemic GDP.

Keywords: tax collection; business cycles; pandemic crisis (search for similar items in EconPapers)
JEL-codes: E32 H12 H20 H71 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2022-05-06
New Economics Papers: this item is included in nep-mac and nep-sea
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