## _tnm1011

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---

### Overview and key considerations
- Technical Guidance Note (TNM/10/11) by William Crandall; authorized for distribution by Carlo Cottarelli, June 2010.
- Two central considerations:
  - Measurement is relevant only if there are consequences for over- and under-performance and if organizational performance can influence resource allocation and manager assessment.
  - “What gets measured gets done” — measurement must support selection of organizational priorities.
- Performance measurement is an ongoing process involving continuous data collection and development of performance indicators.

### Definitions and measurement concepts
- Inputs: resources dedicated to or consumed by the program (e.g., money, staff and staff time, facilities, equipment, supplies; can include constraints such as laws and regulations).
- Activities: what the program does with inputs to fulfill its mission (implementation of strategies, techniques, treatment types).
- Outputs: direct products of program activities measured in volume terms (e.g., numbers of audits conducted, appeals resolved, enforced collection actions).
- Outcomes (or results): benefits or changes for individuals, populations, or government during or after program activities; include medium-term outcomes and long-term impacts.
- Performance indicators: measurements (percentage, index, rate, or comparison) monitored regularly and compared to criteria; should be relevant, quantifiable, verifiable, and free from bias.
- Key performance indicators: quantifiable measurements agreed beforehand that reflect critical success factors; must reflect organizational goals and be measurable.
- Standards (or targets): norms, timeframes, or directions used to judge performance.

### Rationale and evidence
- OECD finding: a performance management strategy is a positive element in any modernization program (In Search of Results: Performance Management Practices. Organization for Economic Cooperation and Development. 1997).
- Countries with performance measurement have seen improvements in management reforms, efficiency, cost awareness and effectiveness, and improved clarity and transparency surrounding accountability.

### Levels of performance measurement
- Strategic level — evaluates the organization’s overall “health” across key indicators (financial performance, customer satisfaction, competencies, integrity).
- Operational level — focuses on efficiency of output production.
- Individual staff member level — measures personal performance against pre-determined standards and objectives.
- Linkage principle: manager indicators should be consistent with operational targets, and operational outputs should support strategic direction.

### Strategic-level application
- Strategic goals should be a small set (examples: from 3 to 6) to focus priorities.
- Typical strategic goal clusters/themes:
  - improved compliance
  - a customer centered focus
  - organizational renewal
  - staff engagement
  - increased productivity
  - cost effectiveness
  - return on investment
- Strategic-level measures:
  - apply to the whole organization
  - cut across functional lines
  - tend to reflect very high-level outcomes
  - support strategic goals and highest level objectives
- Box 1 — Typical strategic goals (examples):
  - improve compliance with the tax laws
  - develop a customer centered focus
  - foster organizational renewal and an efficient, ethical and adaptive organization
  - increase productivity and cost effectiveness
  - ensure taxpayers meet their obligations
  - maintain community confidence
  - improve ease of compliance
  - ensure revenue is available to fund government programs through people meeting payment obligations of their own accord
  - ensure people receive payments they are entitled to, enabling them to participate in society
  - create an environment which promotes compliance
  - continually invest in people and technology to deliver future outcomes
- Typical strategic-level performance measures (examples):
  - Total net revenue collected by tax type compared to forecast
  - Total expenditures compared to approved budget
  - Ratio of costs to collections (direction)
  - Filing and payment compliance rates (direction)
  - Income reporting compliance (from audit)
  - Taxpayer satisfaction surveys

### Operational-level application
- Strategic goals broken into specific operational objectives; each objective supported by several activities (initiatives).
- Operational performance measures should:
  - embody quantity, quality, and timeliness
  - be measurable
  - be verifiable
- Measure types:
  - quantitative: number of audits, taxpayers served, returns processed; efficiency metrics such as number of calls answered per tax officer
  - qualitative: assessment of work items against standards
- Baselines must be established when new measures are created; after baselines, targets can be set.
- Illustrative performance indicators by function (selected examples):
  - Registration and filing compliance
    - Quantity: Number of new registrants; Number of non-filers by tax type
    - Timeliness/quality: Average time to complete new registration; Average time to resolve non-filer case; Late penalties assessed; Accuracy of taxpayer register
  - Taxpayer services and education
    - Quantity: Total Number of taxpayers assisted (Telephone; Walk-in); Written correspondence (E-mail; Internet site hits); Number of advisory visits; Number of educational seminars
    - Timeliness/quality: Average taxpayer wait time for service; Average time to respond to written taxpayer requests; Accuracy of responses provided; Utility of visits and seminars (determined by surveys)
  - Returns processing and payment
    - Quantity: Number of returns processed, by tax type; Number of refunds issued, by tax type; Percentage of returns filed electronically; Percentage of returns filed by paper; Number of payments processed (manually and electronic); Total value of payments processed
    - Timeliness/quality: Average processing time; Average number of days to issue a refund; Return processing accuracy/error rate; Payment processing accuracy/error rate
  - Arrears collection
    - Quantity: Total value of arrears collected; Total number of collection cases closed; Total number of taxpayers contacted; Total resources (person years) assigned; Average annual collection per person year; Average age of collection cases
    - Timeliness/quality: Percentage of cases resolved within X months; Collection case quality (based on specific scoring tools)
  - Audit and investigations
    - Quantity: Number of audits completed by tax type (and by taxpayer segment where applicable) — Simple; Comprehensive; Thematic; Etc.; Additional tax assessed by audit, by tax type; Total resources (person years) assigned; Additional tax assessed per person year; Number of investigations completed
    - Timeliness/quality: Average time to complete audit by type of audit; Audit quality (based on specific scoring tools); Average time to complete an investigation
  - Appeals
    - Quantity: Total number of appeals cases closed; Total resources (person years) assigned; Value of adjustments on appeal; Number of cases heard by courts
    - Timeliness/quality: Average length of appeals case; Appeals case quality (based on specific scoring tools); Degree to which legal deadlines are met

### Individual-level application
- Performance Management Framework requires measurement at organizational and individual levels; individual performance must be cast in context of organizational performance.
- Individual performance agreements should be linked to organizational performance to create “line of sight”.
- Individual performance measures often contribute directly to remuneration outcomes; credibility depends on perceived appropriateness and fairness.
- Cascading concept: organizational indicators cascade to unit, divisional, and individual objectives (example: a strategic goal “improve compliance with the tax laws” might cascade to “increase comprehensive audit coverage for VAT for large taxpayers” for the Head of the Large Taxpayer Office).
- Summary principles for individual performance:
  - Staff performance must be aligned to the strategic objectives of the organization
  - Individual performance objectives must be timely, consistent, and transparent
  - Performance indicators in operational plans must translate into individual accountability
  - Individual performance objectives must roll up to unit plans, which in turn are aligned to divisional plans, and so on

### Key tasks in implementing a performance management system
- Identify the key performance measures — select a set of quantitative and qualitative measures for each function based on established strategic and operational priorities.
- Specify the details of each performance measure — define each measure, the methodology for calculation, the data source(s), the frequency of reporting, and steps to record/process measurement data.

### Operational steps and implementation tasks (Section 2)
- Establish baseline levels against which future standards can be set.
  - When new measures are first created it is necessary to establish a baseline level of performance.
  - Once the baseline is determined, targets or goals can be set.
  - Sometimes the quantitative aspect is simply a “direction” from a given baseline (improve or increase).
- Analyze and report results for each measure.
  - Reports should be prepared regularly and provided to all managers and employees directly involved in the measure, showing target, actual performance to date, and past results if available.
  - An analysis of performance against target should be conducted for each measure.
- Ensure quality of work performed.
  - Quality is often synonymous with accuracy; assess via review of samples of work products or services.
  - Optimally, conduct an annual quality review on a statistically valid sample of work products where quality standards exist.
- Determine organizational responsibility for the performance management framework.
  - Assign responsibility for development and maintenance; possible locations include strategic and operational planning, finance and administration, corporate services, a dedicated unit, or combined functions.
  - The responsible unit must provide guidance and direction; establish a consistent framework, format and standards; determine systems and data sources; and review overall results to identify best practices and weaknesses.

### Country experiences: illustrative cases
- General observation:
  - Performance management experience is diverse; advanced in many OECD countries and emerging in other countries, especially developing economies.

- Romania (Box 2)
  - Context and setup:
    - Population: some 23 million.
    - National agency for fiscal administration decentralized across 42 provinces (judets) with a network of about 300 offices.
    - Performance indicators established for 2004 and 2005 in consultation with regional offices; data collected at the local level.
    - A total of 12 indicators was developed; for each the name, goal, method of computing (scope and formula), and reporting frequency were specified.
  - The 12 indicators:
    - % of letters answered within 20 days
    - Level of voluntary compliance for returns filing
    - Level of voluntary compliance for payment
    - Enforced collection amounts from large taxpayers
    - Revenue collected versus revenue expected
    - % revenue collected through enforced collections
    - Average annual audits per tax auditor
    - Additional amounts assessed from audit
    - Additional amounts assessed from audit per auditor
    - % of tax assessments appealed
    - % of appeals in favor of taxpayer
    - % of appeals in favor of the tax administration
  - Reasons for initial failure:
    - Data were produced, but management did not act on them; no consequences linked to indicator changes and system fell into disuse.
    - Few indicators had standards or targets, making progress judgement difficult.
    - Some indicators were largely out of the tax administration’s control (e.g., disposition of appeals).
    - No prior agreements on interpretation of indicator changes (e.g., whether increased additional tax assessed by audit indicated more efficient audit or decreased compliance).
  - Subsequent developments:
    - In 2007 a draft strategic plan introduced a more systematic set of performance measures, expanding beyond the previous 12 indicators and aligning indicators to the strategic plan.
    - Management performance review was linked to success against indicators.
    - A new strategic planning unit began comprehensive development of performance indicators at local, regional and national levels.

- Canada (Box 3)
  - Context and approach:
    - Tax administration by the Canada Revenue Agency (CRA).
    - The CRA has some 40,000 employees, 40 tax service offices and 7 large processing centers.
    - CRA uses qualitative and quantitative indicators; recognizes need to make some measures more concrete and measurable (2008/09 Annual Report to Parliament).
  - Strategic outcomes (two):
    - Taxpayers meet their obligations and Canada’s revenue base is protected.
    - Eligible families and individuals receive timely and correct benefit payments.
  - Target setting and assessment:
    - Strategic results and program activities are rated as met, mostly met, or not met against targets in the Corporate Business Plan.
    - Performance targets established by management teams through analysis of affordability constraints, historical performance, complexity, and public expectations.
  - Selected measures and reported figures (Registration, Filing, Reporting, Remittance Compliance):
    - Registration Compliance — Canadian businesses that were registered for the GST/HST
      - Target: 90%
      - 2005–2006: 96.8%
      - 2006–2007: 97.7%
      - 2007–2008: 97.0%
      - 2008–2009: 93.8%
      - Rating: Met
    - Filing Compliance — Income tax filing rate for individuals
      - Target: 90%
      - 2005–2006: 92.8%
      - 2006–2007: 93.0%
      - 2007–2008: 92.5%
      - 2008–2009: 92.8%
      - Rating: Met
    - Filing Compliance — Corporations – Taxable incorporated businesses that filed their returns on time
      - Target: 90%
      - 2005–2006: 86.4%
      - 2006–2007: 86.4%
      - 2007–2008: 85.8%
      - 2008–2009: 84.4%
      - Rating: Not Met
    - Filing Compliance — Businesses that filed their GST/HST returns on time
      - Target: 90%
      - 2005–2006: 91.8%
      - 2006–2007: 91.4%
      - 2007–2008: n/a
      - 2008–2009: 90.5%
      - Rating: Met
    - Filing Compliance — Employers who filed their returns on time
      - Target: 90%
      - 2005–2006: 94.5%
      - 2006–2007: 96.0%
      - 2007–2008: 95.5%
      - 2008–2009: 96.4%
      - Rating: Met
    - Reporting Compliance — Key tax credits and deductions not subject to third-party reporting—Individuals
      - Current: Downward trend
      - 2005–2006: 15.5%
      - 2006–2007: 14.7%
      - 2007–2008: 14.8%
      - 2008–2009: 16.5%
      - Rating: Not Met
    - Reporting Compliance — Random audits—Small and Medium-sized Corporate filers
      - 2005–2006: N/A
      - 2006–2007: N/A
      - 2007–2008: N/A
      - 2008–2009: 13.8%
      - Rating: N/A
    - Remittance Compliance — Individuals who paid their reported taxes on time
      - Target: 90%
      - 2005–2006: 92.4%
      - 2006–2007: 92.9%
      - 2007–2008: 91.5%
      - 2008–2009: 93.2%
      - Rating: Met
    - Remittance Compliance — % of corporations that paid reported taxes on time
      - Target: 90%
      - 2005–2006: 92.9%
      - 2006–2007: 90.9%
      - 2007–2008: 92.4%
      - 2008–2009: 92.2%
      - Rating: Met
    - Remittance Compliance — Businesses that collected GST/HST
      - 2005–2006: N/A2.8M
      - 2006–2007: 3.0M
      - 2007–2008: 3.0M
      - 2008–2009: 3.3M
      - Rating: N/A
    - Remittance Compliance — Employers paying source deductions on time
      - Target: 90%
      - 2005–2006: 88.7%
      - 2006–2007: 87.7%
      - 2007–2008: 89.2%
      - 2008–2009: 87.3%
      - Rating: Mostly Met
    - Remittance Compliance — Trend in ratio of outstanding tax debt to gross cash receipts
      - Current: Downward trend
      - 2005–2006: 5.62%
      - 2006–2007: 5.79%
      - 2007–2008: 6.23%
      - 2008–2009: 6.64%
      - Rating: Not Met
  - Where targets are not met, strategies are set out in subsequent strategic and operational plans.

### Key points for tax administration performance measurement design
- Performance measurement is increasingly important in public administration.
- Management of performance in tax administration must be linked to strategic and operational planning and to individual performance.
- Indicators must include quantity, quality and timeliness characteristics.
- Key tasks:
  - Identify key measures and specify details.
  - Set baselines against which future performance can be assessed.
  - Analyze and report results.
  - Establish organizational responsibility for the performance management framework.

*Source: _tnm1011 - Section 2*

### Section 1

### Revenue Administration: Performance Measurement in Tax Administration — Section 1

### I. Overview and key considerations
- This Technical Guidance Note (TNM/10/11) by William Crandall addresses measuring performance in tax administration; authorized for distribution by Carlo Cottarelli, June 2010.
- Two important considerations underpin performance measurement:
  - Measuring performance is only relevant if there are consequences for over and under-performance, and if organizational performance can influence allocation of resources and assessment of managers.
  - “What gets measured gets done” — measurement must support selection of organizational priorities so that what gets done is what should get done.
- Performance measurement is an ongoing process of ascertaining how well an organization is achieving its goals and objectives and involves continuous data collection and development of performance indicators.

### II. Definitions and measurement concepts
- Inputs: resources dedicated to or consumed by the program (e.g., money, staff and staff time, facilities, equipment, supplies; can include constraints such as laws and regulations).
- Activities: what the program does with inputs to fulfill its mission (implementation of strategies, techniques, treatment types).
- Outputs: direct products of program activities measured in volume terms (e.g., numbers of audits conducted, appeals resolved, enforced collection actions).
- Outcomes (or results): benefits or changes for individuals, populations, or government during or after program activities; influenced by outputs and include medium-term outcomes and higher-level long-term impacts.
- Performance indicators: measurements (percentage, index, rate, or comparison) monitored regularly and compared to criteria; should be relevant, quantifiable, verifiable, and free from bias.
- Key performance indicators: quantifiable measurements agreed beforehand that reflect critical success factors; must reflect organizational goals and be measurable.
- Standards (or targets): norms, timeframes, or directions (e.g., “increase” or “improve”) used to judge performance.

### III. Rationale and evidence
- The OECD concluded that a performance management strategy is a positive element in any modernization program (In Search of Results: Performance Management Practices. Organization for Economic Cooperation and Development. 1997).
- Countries with performance measurement have seen improvement in management reforms, efficiency, cost awareness and effectiveness, and improved clarity and transparency surrounding accountability at political and administrative levels.

### IV. Levels of performance measurement
- Performance can be measured at three levels:
  - Strategic level — evaluates the organization’s overall “health” across key indicators (financial performance, customer satisfaction, competencies, integrity).
  - Operational level — focuses on efficiency of output production.
  - Individual staff member level — measures personal performance against pre-determined standards and objectives.
- Linkages: manager indicators should be consistent with operational targets, and operational outputs should support strategic direction.

### V. Strategic-level application
- Strategic goals should be kept to a relatively small number (examples: from 3 to 6) to focus on most important and achievable priorities.
- Typical clusters/themes for high-level strategic goals: improved compliance; a customer centered focus; organizational renewal; staff engagement; increased productivity; cost effectiveness; return on investment.
- Strategic-level measures:
  - apply to the whole organization
  - cut across functional lines
  - tend to reflect very high-level outcomes
  - support strategic goals and highest level objectives
- Box 1 — Typical strategic goals (examples):
  - improve compliance with the tax laws
  - develop a customer centered focus
  - foster organizational renewal and an efficient, ethical and adaptive organization
  - increase productivity and cost effectiveness
  - ensure taxpayers meet their obligations
  - maintain community confidence
  - improve ease of compliance
  - ensure revenue is available to fund government programs through people meeting payment obligations of their own accord
  - ensure people receive payments they are entitled to, enabling them to participate in society
  - create an environment which promotes compliance
  - continually invest in people and technology to deliver future outcomes
- Typical performance measures (strategic level examples):
  - Total net revenue collected by tax type compared to forecast
  - Total expenditures compared to approved budget
  - Ratio of costs to collections (direction)
  - Filing and payment compliance rates (direction)
  - Income reporting compliance (from audit)
  - Taxpayer satisfaction surveys

### VI. Operational-level application
- Strategic goals are broken into a limited set of specific operational objectives; each objective is supported by several activities (initiatives) that constitute the strategy.
- Operational performance measures should:
  - embody quantity, quality, and timeliness
  - be measurable (a performance standard that cannot be measured has no purpose)
  - be verifiable (reported results must be open to scrutiny)
- Measures can be quantitative (e.g., number of audits, taxpayers served, returns processed; efficiency metrics such as number of calls answered per tax officer) or qualitative (assessment of work items against standards).
- Baselines must be established when new measures are created; once baselines are determined, targets can be set.

- Table 1 — Illustrative performance indicators for tax administration (selected examples by function):
  - Registration and filing compliance
    - Quantity measures: Number of new registrants; Number of non-filers by tax type
    - Timeliness and quality measures: Average time to complete new registration; Average time to resolve non-filer case; Late penalties assessed; Accuracy of taxpayer register
  - Taxpayer services and education
    - Quantity measures: Total Number of taxpayers assisted (Telephone; Walk-in); Written correspondence (E-mail; Internet site hits); Number of advisory visits; Number of educational seminars
    - Timeliness and quality measures: Average taxpayer wait time for service; Average time to respond to written taxpayer requests; Accuracy of responses provided; Utility of visits and seminars (determined by surveys)
  - Returns processing and payment
    - Quantity measures: Number of returns processed, by tax type; Number of refunds issued, by tax type; Percentage of returns filed electronically; Percentage of returns filed by paper; Number of payments processed (manually and electronic); Total value of payments processed
    - Timeliness and quality measures: Average processing time; Average number of days to issue a refund; Return processing accuracy/error rate; Payment processing accuracy/error rate
  - Arrears collection
    - Quantity measures: Total value of arrears collected; Total number of collection cases closed; Total number of taxpayers contacted; Total resources (person years) assigned; Average annual collection per person year; Average age of collection cases
    - Timeliness and quality measures: Percentage of cases resolved within X months; Collection case quality (based on specific scoring tools)
  - Audit and investigations
    - Quantity measures: Number of audits completed by tax type (and by taxpayer segment where applicable) — Simple; Comprehensive; Thematic; Etc.; Additional tax assessed by audit, by tax type; Total resources (person years) assigned; Additional tax assessed per person year; Number of investigations completed
    - Timeliness and quality measures: Average time to complete audit by type of audit; Audit quality (based on specific scoring tools); Average time to complete an investigation
  - Appeals
    - Quantity measures: Total number of appeals cases closed; Total resources (person years) assigned; Value of adjustments on appeal; Number of cases heard by courts
    - Timeliness and quality measures: Average length of appeals case; Appeals case quality (based on specific scoring tools); Degree to which legal deadlines are met

### VII. Individual-level application
- Performance Management Framework requires measurement at organizational and individual levels; individual performance should be cast in context of organizational performance.
- Individual performance agreements should be logically linked to organizational performance to create “line of sight” between outcomes and individual measures.
- Performance measures in individual agreements often contribute directly to remuneration outcomes; credibility depends on perceived appropriateness and fairness.
- Cascading concept: organizational performance indicators cascade down to unit, divisional, and individual objectives (example: “improve compliance with the tax laws” might cascade to “increase comprehensive audit coverage for VAT for large taxpayers” for the Head of the Large Taxpayer Office).
- Summary principles for individual performance:
  - Staff performance must be aligned to the strategic objectives of the organization
  - Individual performance objectives must be timely, consistent, and transparent
  - Performance indicators in operational plans must translate into individual accountability
  - Individual performance objectives must roll up to unit plans, which in turn are aligned to divisional plans, and so on

### VIII. Key tasks in implementing a performance management system
- Essential tasks include:
  - Identify the key performance measures — select a set of quantitative and qualitative measures for each function based on established strategic and operational priorities.
  - Specify the details of each performance measure — require a detailed definition of each measure, the methodology for calculating the measure, the data source(s), the frequency of reporting, and a description of steps taken to record or process measurement data.

*Prepared by William Crandall. Technical Notes and Manuals 10/11 | 2010*

### Section 2

### _tnm1011 - Section 2

### Performance measurement: operational steps and implementation tasks
- Establish baseline levels against which future standards can be set
  - When new measures are first created it is necessary to establish a baseline level of performance.
  - Once the baseline is determined, then targets or goals can be set for future performance.
  - Sometimes the quantitative aspect of a measure is simply a “direction” from a given baseline (improve or increase, for example).
- Analyze and report results for each measure
  - Once a set of tax administration results measures is in place, reports should regularly be prepared.
  - Reports should be provided to all managers and employees directly involved in the measure, and should provide results overall and results by location.
  - The information provided for each measure should include the target, actual performance to date, and past results if available.
  - An analysis of performance against target should be conducted for each measure.
- Ensure quality of work performed
  - For tax administration, quality is often synonymous with accuracy.
  - Assessments of whether correct or appropriate procedures were followed can be determined through a review of a sample of work products or services produced by each function.
  - Optimally, a quality review should be conducted annually on a statistically valid sample of the work products completed by a function over the course of a year, provided such products have quality standards.
- Determine organizational responsibility for the performance management framework
  - Assign specific responsibility for development and maintenance of the performance measurement framework.
  - Possible locations for responsibility: strategic and operational planning area, finance and administration, corporate services, a dedicated unit, or combined with related functions; decisions often depend on the size of the tax administration.
  - The responsible unit will have to: provide guidance and direction; establish a consistent framework, format and standards; determine systems and data sources; and review overall results and identify areas of good performance and best practices and areas of weakness.

### Country experiences: illustrative cases
- General observation
  - Tax administration experience with performance management has been diverse.
  - In many OECD and other countries performance management is very well advanced and assuming greater importance.
  - In other countries, especially developing economies, performance management is just getting underway.
- Romania (Box 2)
  - Context and setup
    - Population: some 23 million.
    - National agency for fiscal administration (tax and customs) decentralized across 42 provinces (judets) with a network of about 300 offices.
    - Performance indicators were established for 2004 and 2005 in consultation with the regional offices. Data was collected at the local level.
    - A total of 12 indicators was developed; for each the name, goal, method of computing (scope and formula), and reporting frequency were specified.
  - The 12 indicators:
    - % of letters answered within 20 days
    - Level of voluntary compliance for returns filing
    - Level of voluntary compliance for payment
    - Enforced collection amounts from large taxpayers
    - Revenue collected versus revenue expected
    - % revenue collected through enforced collections
    - Average annual audits per tax auditor
    - Additional amounts assessed from audit
    - Additional amounts assessed from audit per auditor
    - % of tax assessments appealed
    - % of appeals in favor of taxpayer
    - % of appeals in favor of the tax administration
  - Reasons for initial failure of the experiment
    - The data were produced, but management did not pay attention to them; there were no consequences associated with changes (good or bad) in the performance indicators and the system fell into disuse.
    - Few indicators had standards or targets, making it very difficult to judge progress.
    - Some indicators were largely out of the control of the tax administration (for example, the disposition of appeals).
    - There were no prior agreements on what changes in the indicators might mean (e.g., whether an increase in additional tax assessed by audit represented more efficient audit or a decrease in compliance, or both).
  - Subsequent developments
    - In 2007 the draft strategic plan introduced a more systematic set of performance measures, going beyond the previous 12 indicators and including almost all areas of the organization.
    - All indicators were based on and relevant to the strategic plan; management performance review was linked to success against indicators.
    - A new strategic planning unit began comprehensive development of performance indicators at the local, regional and national level.
- Canada (Box 3)
  - Context and approach
    - Tax administration carried out by the Canada Revenue Agency (CRA).
    - The CRA has some 40,000 employees, 40 tax service offices and 7 large processing centers.
    - The CRA has long managed performance but recognizes improvements are possible; the 2008/09 Annual Report to Parliament states: “We use qualitative and quantitative indicators to determine the results achieved in terms of our strategic outcomes and expected results. Survey results, statistical sampling, and operational data inform our assessments. Although we have made progress in developing robust indicators for each of our strategic outcome measures and expected results, we need to make some of them more concrete and measurable”.
  - Strategic outcomes (two)
    - Taxpayers meet their obligations and Canada’s revenue base is protected.
    - Eligible families and individuals receive timely and correct benefit payments.
  - Target setting and assessment
    - Strategic results and program activities are rated as met, mostly met, or not met against targets identified in the Corporate Business Plan.
    - Performance targets are established by management teams through analysis of affordability constraints, historical performance, the complexity of the work involved, and the expectations of Canadians.
  - Measures used to assess the first strategic outcome (Registration Compliance, Filing Compliance, Reporting Compliance, Remittance Compliance) with selected reported figures:
    - Registration Compliance — Canadian businesses that were registered for the GST/HST
      - Target: 90%
      - 2005–2006: 96.8%
      - 2006–2007: 97.7%
      - 2007–2008: 97.0%
      - 2008–2009: 93.8%
      - Rating: Met
    - Filing Compliance — Income tax filing rate for individuals
      - Target: 90%
      - 2005–2006: 92.8%
      - 2006–2007: 93.0%
      - 2007–2008: 92.5%
      - 2008–2009: 92.8%
      - Rating: Met
    - Filing Compliance — Corporations – Taxable incorporated businesses that filed their returns on time
      - Target: 90%
      - 2005–2006: 86.4%
      - 2006–2007: 86.4%
      - 2007–2008: 85.8%
      - 2008–2009: 84.4%
      - Rating: Not Met
    - Filing Compliance — Businesses that filed their GST/HST returns on time
      - Target: 90%
      - 2005–2006: 91.8%
      - 2006–2007: 91.4%
      - 2007–2008: n/a
      - 2008–2009: 90.5%
      - Rating: Met
    - Filing Compliance — Employers who filed their returns on time
      - Target: 90%
      - 2005–2006: 94.5%
      - 2006–2007: 96.0%
      - 2007–2008: 95.5%
      - 2008–2009: 96.4%
      - Rating: Met
    - Reporting Compliance — Key tax credits and deductions not subject to third-party reporting—Individuals
      - Current: Downward trend
      - 2005–2006: 15.5%
      - 2006–2007: 14.7%
      - 2007–2008: 14.8%
      - 2008–2009: 16.5%
      - Rating: Not Met
    - Reporting Compliance — Random audits—Small and Medium-sized Corporate filers
      - 2005–2006: N/A
      - 2006–2007: N/A
      - 2007–2008: N/A
      - 2008–2009: 13.8%
      - Rating: N/A
    - Remittance Compliance — Individuals who paid their reported taxes on time
      - Target: 90%
      - 2005–2006: 92.4%
      - 2006–2007: 92.9%
      - 2007–2008: 91.5%
      - 2008–2009: 93.2%
      - Rating: Met
    - Remittance Compliance — % of corporations that paid reported taxes on time
      - Target: 90%
      - 2005–2006: 92.9%
      - 2006–2007: 90.9%
      - 2007–2008: 92.4%
      - 2008–2009: 92.2%
      - Rating: Met
    - Remittance Compliance — Businesses that collected GST/HST
      - 2005–2006: N/A2.8M
      - 2006–2007: 3.0M
      - 2007–2008: 3.0M
      - 2008–2009: 3.3M
      - Rating: N/A
    - Remittance Compliance — Employers paying source deductions on time
      - Target: 90%
      - 2005–2006: 88.7%
      - 2006–2007: 87.7%
      - 2007–2008: 89.2%
      - 2008–2009: 87.3%
      - Rating: Mostly Met
    - Remittance Compliance — Trend in ratio of outstanding tax debt to gross cash receipts
      - Current: Downward trend
      - 2005–2006: 5.62%
      - 2006–2007: 5.79%
      - 2007–2008: 6.23%
      - 2008–2009: 6.64%
      - Rating: Not Met
  - Where targets are not met, strategies to redress the situation are set out in the next strategic and operational plans.

### Key points for tax administration performance measurement design
- Performance measurement is increasingly important in public administration.
- In tax administration, the management of performance needs to be linked to both strategic and operational planning.
- Individual performance must also be tied to organizational performance measurement.
- Performance indicators need to have quantity, quality and timeliness characteristics.
- Key tasks for a tax administration include:
  - Identifying key measures of performance and specifying all related details.
  - Setting a baseline against which future performance can be assessed.
  - Analyzing and reporting results.
  - Establishing organizational responsibility for the performance management framework.

*Source: _tnm1011 - Section 2*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/tnm/2010/_tnm1011.pdf_