By
TII News Service
PARIS,
MAY 07, 2014 : TAX revenues
are currently rising as a proportion of national incomes in Indonesia and
Malaysia but continue to be substantially lower than for Korea, Japan and
other OECD countries, according to a new OECD report.
Trends
in Indonesia and Malaysia provide for the first time cross-country comparisons
between Asian economies and between Asian and OECD economies.
Increased domestic resource mobilisation is widely accepted as crucial for
countries to successfully meet the challenges of development and achieve higher
living standards for their people. Additional tax revenues enable governments
to simultaneously strengthen infrastructure development, enhance the quality
of education and promote social cohesion.
Key findings
++ Since 2000, tax to GDP ratios have increased by 4 percentage points in Indonesia
(9 to 13%) and 3 percentage points in Malaysia (14 to 17%). However, the latest
2012 figures are significantly lower than those for Korea (27%), Japan (29%)
and the OECD average (34.6%).
++ Taxes on incomes and profits are particularly important in Indonesia and
Malaysia, representing 44% and 71% of tax revenues in each country, respectively.
This compares with 30% in both Japan and Korea and 34% for OECD countries.
++ Consumption taxes represent 46% of revenues in Indonesia and 21% in Malaysia
compared with 31% in the OECD. The collection of social security contributions
in both these Asian countries is much smaller than in the OECD.
++ The findings in the report suggest that both Indonesia and Malaysia could
benefit from some tax reforms. For example, the fuel subsidy in Indonesia and
the GST (goods and services tax) in Malaysia could be reviewed, particularly
as their economies continue to grow and experience structural transformations
such as the expanding so called "middle classes".
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