UN committee opens with call for strengthened regional tax cooperation in Asia-Pacific

PRESS RELEASE: The Second Session of the Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development opened today at the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) with high-level officials underscoring the need to strengthen this Committee as a region-wide tax cooperation platform.

“Increased recognition of regional tax cooperation is needed now so that it can deal with the emerging challenges in the field of international taxation, with a view to supporting the Addis Ababa Action Agenda and the means of implementation of sustainable development,” said UN Under-Secretary-General and Executive Secretary of ESCAP Ms. Armida Alisjahbana at the opening session.

She added, “ESCAP stands ready to support the development of a revamped tax regime to tackle the new business models of digitalization, ranging from web-based services to remote employment and manufacturing activities, by providing a regional platform for a broad-based consultation and cooperation among member States.”

In this regard, over the next three days, member States will deliberate on a recommendation by ESCAP to establish a working group, comprising representatives of the member states and technical experts, to develop proposals for strengthening regional tax cooperation. Such proposals are aimed at increasing the voice of the Asia-Pacific region in global tax cooperation platforms and enhance cooperation among existing subregional tax bodies.

Despite several subregional tax cooperation initiatives that exist in Asia and the Pacific, the region remains the only developing region in the world that lacks a region-wide tax platform for policy dialogue, consensus-building and technical assistance. Such a regional platform is important because, in addition to the traditional challenges of reducing tax avoidance and having a broad tax base, tax officials in the Asia-Pacific region also face new taxation challenges given new business models and the changing global economic landscape.

Delegates also highlighted the need to adopt policy directions that facilitate the transition of economies beyond GDP growth to achieve sustainable development in the region. In particular, they emphasized the importance of adopting a whole-of-government approach, integrating the Sustainable Development Goals (SDGs) into fiscal policies and processes, and aligning financial systems with the 2030 Agenda.

“The cost of achieving the 2030 Agenda represents a challenge to Afghanistan, similar to other landlocked and developing countries. If we think of this in terms of per person per day, Least Developed Countries need $3 per person per day compared to $1 on average for developing countries in the region,” said H.E. Mr. Ahmad Jawad Osmani, Deputy Minister of Economy of Afghanistan. Finding these resources, he shared, will require a range of domestic fiscal policies and more importantly, leveraging upon international development cooperation.

“Development cooperation should come in the form of opportunities for trade, opportunities to attract new investments, and opportunities to bounce back whenever we face exogenous shock. Only then will development cooperation serve a meaningful purpose for small middle-income countries and their people,” highlighted H.E. Ms. Fathimath Niuma, Deputy Minister of National Planning and Infrastructure of Maldives.

“Developing Asia will need to invest $26 trillion over the timeframe of the SDGs or $1.7 trillion per year if the region is to maintain growth momentum, eradicate poverty and respond to climate change. The infrastructure investment gap currently equals 2.4 per cent of projected GDP. Greater of use of public-private partnerships will be critical to close this gap,” said Dr. Yasuyuki Sawada, Chief Economist of the Asian Development Bank.

Recognizing that Countries with Special Needs face structural barriers that limit their ability to finance SDG investment needs, the Committee will also deliberate a proposal to expand the work of the Infrastructure Financing and Public-Private Partnership Network of Asia and the Pacific to cover other aspects of infrastructure finance, such as capital market development and innovative financing. Expanding the Network’s scope is expected to contribute to the region’s effort to leverage private finance for infrastructure financing.

The Committee on Macroeconomic Policy, Poverty Reduction and Financing for Development is held every two years and serves as a mechanism for ESCAP member countries to evaluate the work of ESCAP.