2012年-世界发展银行全球_South_Asia_Economic_Focus_June_2012__Creating_Fiscal_Space_through_Revenue_Mobilization_110页_5mb

South Asia Economic Focus Summary

Core Content

This document, titled Creating Fiscal Space through Revenue Mobilization, is part of the South Asia Economic Focus series published by the World Bank in June 2012. It examines the fiscal challenges and opportunities in South Asian countries, with a particular emphasis on increasing revenue collection to create fiscal space for public investment and development. The report highlights the low levels of public revenue in the region, the impact of structural and institutional factors on tax productivity, and the need for reform to improve tax collection and diversify revenue sources.

Main Points

1. Revenue Trends and Fiscal Space

• Revenue Levels: Most South Asian countries collect public revenues averaging 10–15% of GDP, significantly below the 20% average in comparable developing countries and even lower than OECD countries.
• Fiscal Deficits and Debt: The region has high deficit-to-GDP and debt-to-GDP ratios, which limit the room for public spending.
• Debt Sustainability: IMF-World Bank Debt Sustainability Analyses (DSAs) show that most South Asian countries need to reduce primary deficits to maintain debt sustainability. However, absolute debt levels continue to rise.
• Fiscal Space: The concept of fiscal space is defined as the budgetary room that allows governments to spend on development without jeopardizing financial sustainability.

2. Structural Factors Affecting Revenue

• Income Levels: Higher per capita income is associated with higher revenue-to-GDP ratios.
• Agricultural Share: A higher GDP share from agriculture reduces revenue-to-GDP ratios due to low taxability of agricultural income.
• Service Sector: A larger service sector share correlates with lower revenue due to the dominance of small and informal firms.
• Trade: Higher international trade tends to increase revenues, but the effect is limited due to trade liberalization.
• Natural Resources: Countries with significant natural resource income have higher revenue levels.
• Urbanization: Urbanization is associated with lower revenue collection due to increased informal activities.
• Inflation and Transparency: Lower inflation and higher transparency tend to boost revenue collection.

3. Tax Regimes and Productivity

• Tax Structures: South Asian tax regimes are generally close to best practices recommended by the World Bank and IMF.
• Tax Productivity: Despite this, tax yields remain low, particularly in income and value-added taxes (VAT).
• Buoyancy: Average tax buoyancy (revenue growth relative to GDP growth) is at or above 1 for most South Asian countries, except Sri Lanka (0.6).
• Tax Evasion: Weak tax administration and excessive use of discretion lead to large-scale tax evasion, requiring better audits and enforcement.
• Tax Exemptions: High levels of tax exemptions and holidays erode the tax base and are often introduced due to political pressure, not market failures.

4. Nontax Revenue

• Nontax Revenue (NTR): NTR is an important part of revenue mobilization in South Asia, with India, Sri Lanka, and Bangladesh relying on around 15% of total revenues, while Bhutan and Maldives depend on more than 50%.
• Stabilizing Role: NTR helps stabilize revenues, as it is less volatile than tax revenue.
• User Fees: User fees for government services can be a stable form of NTR, provided they reflect the cost of service provision.
• Challenges: South Asian governments are still far from charging appropriate user fees relative to their operations and maintenance (O&M) spending.

Key Findings

• South Asian countries collect less revenue than other regions, despite similar or higher per capita income levels.
• Tax yields are low across the region, with Sri Lanka and Bangladesh having the lowest income tax yields and Pakistan and Bangladesh the lowest VAT yields.
• Buoyancy is generally strong, except for Sri Lanka, which has weak revenue growth relative to GDP.
• Tax administration is a major constraint on revenue collection, with many countries failing to update tax laws or adopt modern principles.
• Nontax revenue is a significant source of income, especially in Bhutan and Maldives, but its pro-cyclicality and inefficiency remain issues.
• Revenue gaps have remained unchanged for the past 10–15 years, suggesting the need for structural reforms.

Policy Recommendations

• Strengthen Governance: Improve transparency, accountability, and macroeconomic stability to enhance revenue collection.
• Sustain Tax Reform Efforts: Continue and deepen tax reform initiatives, especially in India, Sri Lanka, Bangladesh, and Bhutan.
• Broaden Tax Base: Review and reduce tax exemptions and preferences to increase the tax base.
• Improve Tax Administration: Simplify tax rates and improve compliance mechanisms, including audits and enforcement.
• Diversify Revenue Sources: Countries reliant on single sectors (e.g., hydropower in Bhutan, tourism in Maldives) should diversify revenue to reduce vulnerability.
• Optimize User Fees: Ensure user charges for government services are cost-based and efficient.

Conclusion

The report emphasizes the importance of revenue mobilization in creating fiscal space for development in South Asia. While tax regimes are generally aligned with best practices, low tax yields, narrow tax bases, and weak tax administration are major obstacles. Nontax revenue, although significant, requires improvement in efficiency and sustainability. The findings suggest that structural reforms and institutional improvements are essential for enhancing revenue collection and supporting long-term economic development in the region.

Key Information

• Document Title: Creating Fiscal Space through Revenue Mobilization
• Publication Date: June 2012
• Region: South Asia
• Authors: Hisanobu Shishido, Kirthisri Rajatha Wijeweera, Bingjie Hu, Congyan Tan
• Contributors: Daniel Alvarez, Sebastian S. James, Shreehari Dhungana, Nathan Pamart, Prajwal Shahi, Daminda Fonseka
• Peer Reviewers: Milan Brambhatt, Daniel Alvarez
• Fiscal Year Differences: South Asian countries use varying fiscal years (e.g., April–March, July–June, January–December), which affects data comparability.

Appendices

• Appendix A: Empirical Estimation of Revenue Gap
• Appendix B: Tax-Specific Buoyancies, 2001–2010
• Appendix C: Country Studies: Fiscal Issues
• Appendix D: Summary of Debt Sustainability Analyses
• Appendix E: Fiscal Trends
• Appendix F: Trends of Nontax Revenue

Figures and Tables

• Figure 1.1: General Government Revenue, 2000–2012 (as % of GDP)
• Figure 1.2: Public Debt-to-GDP Ratio, 2010
• Figure 1.3: Total Public Expenditure (as % of GDP)
• Figure 1.4: Public Expenditure on Health Care (as % of GDP)
• Figure 1.5: Public Expenditure on Education (as % of GDP)
• Table 1.1: How Much Can South Asian Countries Borrow: Baseline Scenarios of IMF-World Bank Debt Sustainability Analyses

Summary of Fiscal Space

Note: Maldives is excluded from the table due to unsustainable debt levels.