Mobilizing resources for a sustainable recovery: Things to know

Article | 3 May 2021

After spending heavily to support their economies during the COVID-19 pandemic, countries in Asia and the Pacific need to look to tax and financial management reforms to mobilize resources for a sustainable, equitable recovery.

  1. The COVID-19 pandemic has forced Asia and Pacific countries to spend trillions on their economies and set back recent poverty reduction gains by years.

  2. Tax yields in Developing Asia average about 17.6% of GDP, well below the OECD average, with many countries suffering from high levels of tax evasion and weak administration.

  3. Mobilizing domestic resources through tax reforms and stronger financial management will help stressed economies raise revenues for sustainable growth.

  4. Options for broadening the tax base include removing tax exemptions, imposing wealth and intergenerational taxes, hiking property taxes and adopting carbon and digital service taxes.

  5. Adopting a multilateral consensus-based system for taxing the digitalized economy will provide resources, while avoiding double taxation.

  6. Closing corporate tax loopholes, cracking down on evasion, easing registration procedures and using data and advanced analytics can improve compliance.

  7. Making tax systems more progressive will increase fairness and boost community confidence in them.

  8. ADB is helping developing member countries strengthen their tax systems and draw up medium-term revenue plans with the creation of a regional digital tax hub in 2020.