Overview of global trends in tax policies and their role in shaping social �and environmental outcomes

FINANCING SUSTAINABLE DEVELOPMENT IN ASIA-PACIFIC REGION

IN TIMES OF VOLATILITY AND UNCERTAINTIES

Sudarshan K, Asia-Pacific Regional Tax Specialist- UNDP

Session VII - Moving towards SDG-aligned tax policies

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Gupta and Jalles (2022) Priorities for Strengthening Key Revenue Sources in Asia, Asian Development Bank.

Asia Pacific potential to increase revenue by 3.6% of GDP on average

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Waves of Tax Reforms.

Global Tax Trends Driving Tax Reforms

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Sustainable Tax Reforms

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Thank you.

For more information, visit www.inff.org

Timor Liste –Country Case

FINANCING SUSTAINABLE DEVELOPMENT IN ASIA-PACIFIC REGION

IN TIMES OF VOLATILITY AND UNCERTAINTIES

Elson Martinho da Costa, National Director for Effectiveness Management and Mobilization of External Assistance, Ministry of Finance

Session VII - Moving towards SDG-aligned tax policies

I. Introduction

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República Democrática de Timor-Leste

Ministério das Finanças

Population is 1.34 million, population & housing census 2022

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A set of Strategic Development Plan (SDP 2030) is outlined long term vision, to become a middle income country, with healthiest, well-educated and safe population.

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Timor-Leste GDP for 2023 is $1.99 million, mostly is coming from petroleum fund, around 90% and 10% contribution is coming from domestic revenue (non-oil).

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Fiscal strategy (Mobilizing domestic revenues and introducing new tax initiatives)

II. Health Context

Products harmful to health

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• Among the many lessons that the world learned from the COVID-19 pandemic, one was very clear that healthy population is critical in facing potential health threats and is a precondition for continued development.

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• Timor-Leste has one of the highest smoking rates in the world.

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• The WHO estimates that in 2020, about 35% of the population aged 15 years and above, were tobacco users.

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• Tobacco use is a major contributor to non-communicable diseases such as chronic respiratory diseases, cancer, diabetes, heart disease, and stroke as well as a factor for some communicable diseases such as tuberculosis, which according to WHO statistics, remain high in Timor-Leste, with an incidence of 486 per 100,000 people.

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República Democrática de Timor-Leste

Ministério das Finanças

III. Financing Strategy

Introduce pro-health taxation

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• Introducing new tax initiatives in 2022 and implemented in early 2023, the sin tax for tobacco, sugar and sweetened beverage.

• Intends to increase excise of those goods in order to increase the tax revenue, example for tobacco product from USD 19 to USD 25 /kg, generate an extra USD 4 million total tax revenues (duty, excise, VAT) per year, Reduce smoking rate by 0.4% from 29.1% to 28.7%.

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• The WHO advocated to increase by 50% to USD 50/kg on tobacco and other tobacco products in 2023, this might increase The retail price of cigarettes would about USD 0.6/pack from USD 1.8 to USD 2.4/pack, Generate an extra USD 18 million in total tax revenue per year and Reduce the smoking rate by 1.9% from 29.1% to 27.2, resulting in some 11,000 fewer adult smokers.

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• Additionally, recognizing the need to promote healthy behaviors in other areas, as well as introduced a new $1 per kilogram sugar tax and an introduction of a $3 per liter excise duty on sugary drinks.

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República Democrática de Timor-Leste

Ministério das Finanças

IV. Conclusion

It is our hope that these measures will be expanded in coming years, encouraging a healthier population, reducing the burden on our healthcare system, all while expanding our domestic revenue base to further invest in our people’s wellbeing.

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República Democrática de Timor-Leste

Ministério das Finanças

III. Challenges

• Enforcement/implementation, did not widely conducting socialization to all stakeholders.
• Payment mechanism (awareness of tax payer).
• Provoke inflation, an increase in the retail price of certain goods.

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Thank you.

For more information, visit www.inff.org