Tax-to-GDP ratios increased in the majority of Asian and Pacific economies covered by a new OECD report published recently. Nine of the economies in the publication increased their tax-to-GDP ratios between 2016 and 2017, compared with only three in the preceding year, according to Revenue Statistics in Asian and Pacific Economies 2019.
This sixth edition of Revenue Statistics in Asian and Pacific Economies covers 17 countries, including Vanuatu for the first time. Tax-to-GDP ratios across these countries varied considerably, ranging from 11.5% in Indonesia to 32.0% in New Zealand. In general, tax-to-GDP ratios were higher in the Pacific economies than in the Asian economies: Pacific economies had tax-to-GDP ratios higher than 24%, with the exceptions of Tokelau (14.2%) and Vanuatu (17.1%), while the Asian economies reported tax-to-GDP ratios below 18%, with the exceptions of Korea (26.9%) and Japan (30.6%).
India’s tax-to-GDP ratio is at 16.6% is well below the emerging market economies (EME) and OECD averages of about 21% and 34% respectively. India’s tax to GDP increased from 10.4% in 1965 to 16.6% in 2015-16, the corresponding tax-to-GDP ratio of OECD countries increased from 21% in 1965 to 33% in 2015. Even compared to OECD nations with lower GDP (Korea, Turkey, Mexico, Chile, Portugal, Greece, Slovenia and Poland) is still lower at 16.6% versus average of 24% of these nations.
The increased revenue collection of most countries in 2017 was largely driven by economic factors rather than changes in tax policy or administration. These factors included higher revenues from oil production in Kazakhstan, the growth of the logging sector in the Solomon Islands and Vanuatu’s recovery from Cyclone Pam in 2015.
Meanwhile, a fall in revenues from corporate income tax (CIT) and value added tax (VAT) resulting from an economic slowdown explained the decline in Papua New Guinea’s tax-to-GDP ratio. Over a longer timeframe, 11 of the 17 economies in the publication increased their tax-to-GDP ratios between 2007 and 2017, with the exception of Australia, Indonesia, Kazakhstan, Papua New Guinea, New Zealand and Vanuatu.
The report is a joint publication of the OECD Centre for Tax Policy and Administration and the OECD Development Centre with the co-operation of the Asian Development Bank (ADB), the Pacific Islands Tax Administrators Association (PITAA) and the Pacific Community (SPC) and the financial support of the European Union.