Priorities for Strengthening Key Revenue Sources in Asia

Sanjeev Gupta and Joao Jalles
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Sanjeev Gupta: Center for Global Development, Washington, DC, United States

Asian Development Review (ADR), 2023, vol. 40, issue 02, 271-303

Abstract: This paper discusses the evolution of key taxes during the past 20 years in developing Asia and the fiscal challenges that the region’s economies face in light of the coronavirus disease (COVID-19) pandemic. It presents estimates of tax capacity and tax potential, and discusses the productivity of key taxes in the region. The paper finds that developing Asia has the potential to raise more revenues–reaching up to 4% of gross domestic product on average. While corporate income tax productivity is high vis-à -vis other regions, the same does not apply to personal income tax or value-added tax. There is potential in many economies to raise more revenues by improving the compliance and design of the value-added tax. It is also important to ensure that tax systems in developing Asia become more progressive with the expansion of personal income and property taxes. Increased allocations and better targeting of social spending would help offset some of the regressivity stemming from indirect taxes. An important source of revenue leakage is tax expenditures granted by economies in the region.

Keywords: income inequality; stochastic frontier analysis; tax policy; tax potential; tax reforms (search for similar items in EconPapers)
JEL-codes: C33 H20 H23 H30 N15 O53 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Priorities for Strengthening Key Revenue Sources in Asia (2022)
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DOI: 10.1142/S0116110523500178

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