Eleventh ADB Tax Conference
Opening Remarks by
Myoung-Ho Shin
Vice-President (West)
Asian Development Bank
ADB Institute, Tokyo, Japan
5-11 September 2001
Mr. Kimura, Deputy Director General, Ministry of Finance; distinguished delegates and resource speakers; ladies and gentlemen:
On behalf of the Asian Development Bank, I would like to join the ADB Institute in welcoming all of you to this eleventh Tax Conference. ADBI and ADB are delighted to have such good participation.
The conference is financed through the Japan Special Fund, a unique grant facility the Government of Japan provides to the ADB. Since 1998, we have had as a partner the ADB Institute, which has contributed both intellectually and financially to this conference. The conference also benefits from the cooperation and collaboration of the Organization for Economic Cooperation and Development and the Government of Singapore. T hese partnerships and collaborations are very important and we hope they will continue to grow stronger every year.
Ladies and gentlemen, ADB recognizes the importance of human capital for economic development. ADB also knows the importance of good tax policies and systems. That is why we have been holding tax conferences over the last ten years. These conferences bring together tax officials and experts to discuss international as well as national taxation policy and administration. These gatherings provide both a training opportunity and a lively forum. Here we can discuss new challenges in taxation, such as those posed by globalization of markets and localization of decisionmaking and administration, and extend our own knowledge and understanding of taxation.
Previous conferences have been very successful. The key factors for their success have invariably been the participants and resource persons. Good participation and speakers means high-quality discussion and a rich learning experience for all. I am sure we have the same successful ingredients in the mix for this, the eleventh conference in this conference series.
We are also taking a step from our end as organizers to sustain the success. In order to make this tax conference more attractive and meaningful and to cope with new environments, we, ADB and ADBI, after consultation with the parties concerned, have introduced several new elements for this year. I wish to stress several points:
- previous tax conferences consisted of two components, namely a seminar on international taxation and a training workshop on taxation, the conference is now merged into one event, to improve effectiveness and quality;
- the number of participants is widened, in particular, participants from Pacific countries;
- the content of the Conference is more closely focused on critical current issues;
- ample time is allocated to open discussions; and
- an Attachment Program, or short on-the-job training, with the Inland Revenue Authority of Singapore is provided.
We do hope that the combination of the measures will give a wider participation, better content, increased effectiveness, and tighter focus. We will continue improving this important event through the experience from this year's Conference.
Each one of you, as a tax policymaker, is entrusted with a key role in fostering economic development and poverty reduction. It is a fact that governments must mobilize resources for national development through taxation. But they also must use taxation to serve economic and social purposes. The choices that governments make in designing tax systems matter very much. Patterns of taxation can change the distribution of income and wealth in our societies. In practice, however, highly progressive tax systems tend to discourage formal economic activity and foster evasion and avoidance. This presents an obvious and longstanding challenge to those who make tax policy. They face the age-old conundrum of pursuing an effective tax system that does not distort private resource allocation, yet that provides adequate revenues to finance public expenditures in a non-inflationary manner.
Public sentiment has shifted in recent years toward reducing the size of government and promoting more decentralized and localized decision making. This is a part of perennial dilemma that faces all countries: What is the best structure for effective public administration? Taxation is a critical element in effective government. The experience of development in recent times has led to a shift in many countries to greater reliance on indirect taxes such as value-added tax. A particular consideration for some of our developing member countries is that in practice, indirect taxes are much easier to collect and administer. Redistribution objectives must be met in other ways.
New issues and challenges continue to emerge in international taxation, spurred in globalization and advancing technology. The issues of international tax competition, and tax evasion and avoidance, have moved to the top of tax policy agendas. For this reason, we are pleased to have with us three experts from the OECD. OECD made a comprehensive study on the taxation of e-commerce and presented the report to its May Ministerial Meeting this year. I am delighted that OECD representatives share the outcome of the study with us.
In the Asian and Pacific region, no regional organization exists for tax policy cooperation and harmonization. There are a number of ideas being discussed for multilateral approaches to international taxation, such as the United Nations Initiative on Financing for Development, a joint effort by the United Nations, the World Bank, the International Monetary Fund and the World Trade Organization. None has borne fruit yet, as the practical, political and diplomatic difficulties are numerous, but solutions must be found. We hope there will be lively debate on these ideas during the conference.
Over the past forty years, Asia and the Pacific have made enormous economic strides, but it is a fact that poverty has endured and increased. The percentage of destitute people of the region has fallen over the years with economic development, but the total number of the poor people has grown because of population increase. Today, an estimated 900 million in the region live in poverty. Recognizing the challenge of poverty, in 1999, ADB adopted poverty reduction as its overarching goal. We are following approach founded on three ideas - economic growth should be pro-poor; social development policies are important so people can make full use of opportunities to improve their standards of living; and good governance is the key to empowerment and participation in decision making that affects their lives. All are important ideas, and all are linked. As an element of governance, ADB has a particular interest in the implications of tax policies for the poor, and I would encourage you all to give thought to this.
Let me conclude by extending a hearty "thank you" to the Government of Japan for its continuing support of this forum. Our thanks also go to our partner organizations, the OECD, the Government of Singapore, and the ADB Institute. And many thanks also go to those behind the scenes who make these conferences happen, especially the Tax Bureau at the Ministry of Finance of Japan.
Ladies and gentlemen, I wish you fruitful deliberations and a successful conference. May your work result in better tax policies and programs, leading to improved social and economic development in Asia, and contributing to our common goal of ending poverty in Asia and throughout the world.
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