Foto: Kimimasa Mayama/NTB scanpix

TAX INCREASE? Asian developing countries need to increase taxation in order to spend more on education and health, according to a new report.

Where are Asia’s economies heading?

Published: 11 Apr 2014

An economic crash in China is unlikely. But Asian countries need to increase taxes. These were some of the conclusions from the launch at NUPI of the Asian Development Outlook 2014.

An economic crash in China is unlikely. But Asian countries need to increase taxes. These were some of the conclusions from the launch at NUPI of the Asian Development Outlook 2014.

The Asian Development Outlook (ADO) 2014 was launched in Norway in a seminar at NUPI on April 8.

Deputy Minister Hans Brattskar from the Ministry of Foreign Affairs introduced the seminar by stating that the ADO 2014 focus on health and education is in line with the priorities of the Norwegian government. His speech is available here.

Chinese crash unlikely

Panelist Olav Chen from Storebrand argued that predictions of a crash or major slow-down in China, which have been made repeatedly by many actors for years, have been and remain overblown.

“The Chinese authorities have a good grip on the situation, and most of this slow-down is wanted because the Chinese want a shift from quantity to quality in their economic growth”, Chen said.

Juzhong Zhuang, Deputy Chief Economist from the Asian Development Bank, expressed the same view.

Tax increase needed

According to the Asian Development Outlook 2014, the developing countries in Asia spend less on education and health than many other countries in the world, and have relatively low taxes. They also have low debts, but these may rise as the population ages. They therefore need to increase taxation in order to spend more on education and health, according to the report.

Arne Melchior, senior researcher at NUPI, raised the issue about whether there is a ‘Kuznets effect’ in Asia so that inequality may not necessarily continue to rise in the future.

“Some of the background research for ADO 2014 points in this direction”, responded Juzhong Zhuang from the Asian Development Bank.

For further information, check out the report Asian Development Outlook 2014 here.