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‘Tax reforms may be timely in pandemic’

THE pandemic presents opportunities for countries to undertake much-needed tax reforms, according to experts from the Asian Development Bank (ADB).

In an Asian Development Blog, ADB International Tax Policy Consultant Sissie Fung; Independent Tax Policy Consultant Brian McAuley; and Public Management Specialist for Taxation Go Nagata said the financial challenges of governments highlights the need to harness the power of taxation.

They taxes on property, such as recurrent taxes on immovable property, recurrent taxes on net wealth, taxes on estates, inheritances and gifts, as well as progressive income taxes should be considered as part of countries’ medium and long-term revenue strategies.

“The Covid-19 pandemic has created unprecedented fiscal challenges. But it also presents opportunities for a fairer, more efficient and more robust tax revenue and spending system,” the authors said.

The ADB experts said their recent study, focusing on Cambodia, the Philippines, Thailand and Vietnam, found that increasing taxes is one of the options being used to raise government revenues.

They noted that property tax reforms in these countries contributed to government strategies. These reforms when framed in coherence with other systems, as well as government functions related to land management, could benefit countries.

The authors said that while some of these tax reforms have been put on hold in 2020, governments have found a renewed sense of urgency in the implementation of these reforms.

In Thailand, the authors said these reforms include a new Land and Building Tax while in the Philippines, the country embarked on a Real Property Valuation and Assessment Reform program.

The program in the Philippines, the authors said, aim to usher in an efficient, transparent, and equitable real property valuation and transaction system at the Bureau of Local Government Finance.

It is also estimated to yield incremental real property tax collections at local government units by 25 percent in 2023 onwards.

The authors said other Asian developing countries are using the study to compare, evaluate and improve the performance of their own property taxation systems and to engage in broader policy discussions on reform opportunities.

“The opportunity to enhance revenue mobilization is not limited to property taxation. Indeed, Asian developing countries are addressing a range of necessary tax reforms in their strategies for domestic resource mobilization and international tax cooperation,” the authors said.

Implementing tax reforms are important to fight tax evasion and avoidance as well as improve compliance and tax administration, the experts said.

Meanwhile, challenges to secure a longer-term revenue reform strategy remain, they said. This strategy must recognize efforts to address other challenges such as Covid-19, the climate change crisis, economic inequality, and the digital divide.

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