Higher domestic resource mobilisation through taxation in the Asia/Pacific region could help close the financing gap to fund the sustainable development goals (OECD, 2023[1]). Across Asia/Pacific countries, the average tax-to-GDP ratio was 19%, much lower than the OECD average of 34% (Figure 5.10). In 2022, the tax-to-GDP ratio was at or above 30% in Japan, Korea and New Zealand, while it was only around 10% in Lao PDR and Pakistan.
In most Asia/Pacific countries, social security contributions (SSCs) represented a very small portion of the tax-to-GDP ratio (Figure 5.11). On average, SSCs were roughly 2% of GDP across the Asia/Pacific region. However, SSCs were above 10% of GDP in Japan, and between 5% and 10% of GDP in China, Korea and Viet Nam.
Tax structures varied greatly in 2022 across the Asia/Pacific region (Figure 5.12). In 16 countries, taxes on goods and services were the largest share of tax revenue, while seven countries obtained the largest share of tax revenues from income taxes. Japan was the only country that obtained the largest share of tax revenues from SSCs (40%). On average, across Asia/Pacific countries, 47% of tax revenues were from taxes on goods and services, 41% from income taxes, 10% from social security contributions and 6% from other taxes.
Countries with higher GDP per capita tend to have higher tax-to-GDP ratios (Figure 5.12). The four OECD countries in the Asia/Pacific region (Australia, Japan, Korea and New Zealand) had higher levels of GDP per capita and tax-to-GDP ratios than the rest of the Asia/Pacific region. Singapore had the highest GDP per capita, but a relatively low tax-to-GDP ratio. Kyrgyzstan, and Samoa had higher tax-to-GDP ratios than one would have expected given their level of GDP per capita.
