The Revenue Administration Gap Analysis Program: An Analytical Framework for Personal Income Tax Gap Estimation
Technical Notes and Manuals, August 27, 2021
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- The Revenue Administration Gap Analysis Program: An Analytical Framework for Personal Income Tax Gap Estimation
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Bibliographic details
- Published: August 27, 2021
- Series: Technical Notes and Manuals
- DOI: https://doi.org/10.5089/9781513577173.005
Summary and purpose
- It is generally difficult to measure revenue not collected due to noncompliance, but a growing number of countries now regularly produce and publish estimated revenue losses.
- Good tax gap analysis enables the detection of changes in taxpayer behavior by consistent estimates over time.
- This Technical Note sets out the theoretical concepts for personal income tax (PIT) gap estimation, the different measurement approaches available, and their implications for the scope and presentation of statistics.
- The note focuses on practical steps for measuring the PIT gap by establishing a random audit program to collect data, and how to scale findings from the sample to the population.
Theoretical concepts for PIT gap estimation
- Defines the conceptual basis for estimating the personal income tax (PIT) gap.
- Discusses implications of different conceptual choices for the scope and presentation of PIT gap statistics.
- Emphasizes consistency of methodology over time to detect changes in taxpayer behavior.
Measurement approaches and implications
- Presents different measurement approaches available for PIT gap estimation.
- Explains implications of each approach for the scope of the estimate and how statistics should be presented.
- Highlights the role of taxpayer registry data and considerations related to the Non-Observed Economy and the Shadow Economy.
Practical steps: Random Audit Program and scaling
- Recommends establishing a Random Audit Program to collect representative data for PIT gap estimation.
- Describes how to scale findings from the random-audit sample to the population to produce aggregate PIT gap estimates.
- Notes relevance for auditing, tax compliance measurement, and revenue performance assessment.
Key subjects and keywords (as listed)
- Subjects: Auditing, Expenditure, Personal income tax, Public financial management (PFM), Revenue administration, Revenue Administration Gap Analysis Program (RA-GAP), Revenue performance assessment, Tax gap, Taxes
- Keywords: Auditing, gap estimate, Non-Observed Economy, Personal Income Tax, Personal Income Tax gap estimation, PIT gap, publication order, Random Audit Program, Revenue Administration Gap Analysis Program (RA-GAP), Shadow Economy, Tax Administration, Tax Avoidance, Tax Compliance, Tax Evasion, Tax Gap, taxpayer registry data
Content in this bundle
- Appendix 1 Random Sample Designs