Social protection agendas in the region will benefit from the right fiscal reforms and policies, the Asian Development Bank (ADB) said, with the Philippines tagged as one of several Asia-Pacific economies with the potential to meet the challenge.
A new study by the Manila-based lender looked at the fiscal situation and social welfare programs of 16 developing countries, seven of which were said to have 20 percent of their populations living below the poverty line.
“Many countries still face considerable challenges in creating the sustainable financing needed for their social welfare program, the bedrock for the success of the social protection agenda under the SDGs (Sustainable Development Goals),” said Woochong Um, director general of the ADB’s Sustainable Development and Climate Change Department, in a statement on Wednesday.
In addition to the Philippines, the ADB study also covered Azerbaijan, Cambodia, India, Indonesia, Kazakhstan, Lao People’s Democratic Republic, Malaysia, Mongolia, Myanmar, Nepal, People’s Republic of China (PRC), Sri Lanka, Thailand, Timor-Leste, and Vietnam.
“Seven of the sample countries — India, Indonesia, Kazakhstan, the Philippines, the PRC, Sri Lanka, and Thailand — may well have the fiscal space to introduce even higher levels of social protection,” it said.
These include universal benefits for children and the elderly and self-targeted benefits for the unemployed if the country’s can maintain their present revenue levels.
The report, however, noted that the Philippines and five other countries would need to expand revenues to develop a “modest but complete” program.
“Six developing member countries may have to open up new fiscal space — India, Indonesia, Kazakhstan, Nepal, the Philippines, and Sri Lanka — to meet the requirements of a rather modest but complete social protection system. They will probably have to bring their revenues up to the regional average to close the social protection gap,” the report said.
The ADB said the Philippines could rely in higher taxes to address this.
“As a net natural resources importer, the country is suggested to rely on taxes. Post-tax subsidy taxes can be reduced to an amount of 3 percent of GDP (gross domestic product). Tax efforts can be made to collect 4.3 percent of GDP, especially from corporate income tax,” the report said.
“Essential sources of revenue mobilization for the countries in the study are, in rough descending order, increasing the tax effort (including, for some countries, raising tax rates), reallocating energy subsidies, and reallocating natural resource taxes. In particular, Myanmar, Nepal, the Philippines, and Thailand could generate considerable revenues from stricter tax enforcement,” it added.