Speaking in a keynote address at Citibank 10th annual Asia-Pacific Investor Conference, Menon said the discussion must move away from looking simply at the rate of taxation.
“The US could do with a broader tax base, simpler tax codes, and less exemptions. In Europe, similarly, there are opportunities to increase the efficiency of the VAT system including in broadening its base,” he said in the speech, entitled ‘The global economy: securing a return to normalcy’.
He also identified pension reform as essential for governments in advanced economies to embrace, by overhauling spending “in the face of impending demographic changes”.
“Effective pension reform requires a judicious combination of increases in the statutory retirement age and reductions in the generosity of benefits, with the balance varying from country to country,” he said.
In a wide ranging global review of the economic issues that regions must deal with, Menon further highlighted how Asia should deepen and broaden its financial markets.
“Asia needs to do a better job in efficiently intermediating its large savings pool, as well as directing capital inflows towards more productive investment in the region. Asian financial systems are still too dependent on banks. Deep corporate bond markets can play a complementary role in enabling private and institutional investors to invest for the long term.”
Menon’s speech has coincided with the long-awaited publication of the Singapore Government’s white paper outlining a vision for sustaining its economic growth. The government forecast that its population would have to rise by up to 30%, to 6.9m by 2030.
To read the full speech, click here.
