Raising Property & Wealth Tax Could Speed Up Pandemic Recovery, says ADB Blog

• 3 March 2021
• Local News
• 2210 Views

Cambodia and other countries in the Asia-Pacific should raise tax collection, in particular on the tax on property and wealth, to speed the economic recovery once the pandemic ends, according to the Asian Development Bank (ADB) blog.

In the article entitled ‘How governments can use tax policy to speed pandemic recovery’, the authors suggested that taxing the wealthy, many of whose incomes have been largely unaffected by the crisis, is one of the most effective solution to increase government’s revenue, reduce income inequality, and promote sustainable development.

The article added that 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 part of countries’ medium and long-term revenue strategies.

In the case of Cambodia, ADB has witnessed a noticeable increase in the tax collection over the past few years, which is a positive sign that the government is moving toward the right direction.

“Property tax reforms can contribute to broader government strategies, and can benefit from coherence with other systems, as well as government functions related to land management,” read the article.

According to the same source, more than US$25 trillion in financial support has been announced by Asian countries to combat the pandemic as of November 2020. At the same time, tax collections are declining everywhere.

The low tax collection is expected to push tens of millions of people in the region into extreme poverty, increase inequalities and reduce sustainable development.

Nevertheless, the ADB suggested that increasing the government’s revenue is not limited to property and wealth taxation. There is also another wide range of necessary tax reforms for domestic resource mobilisation and international tax cooperation.

• Analysis
• Policy and Strategy