Legislating for Fair and Effective Tax Collection

Tax Law Technical Note, March 18, 2025

Source details

Authors: Irving Aw, Brendan Crowley, Cory Hillier, Rose A Nyongesa, Lydia E Sofrona, Christophe J Waerzeggers
Published: March 18, 2025
Series: Tax Law Technical Note
DOI: https://doi.org/10.5089/9798229004756.008

Fair and effective tax collection is critical to the success of any tax system in raising revenue and should be properly legislated.
Voluntary payment of taxes by taxpayers is always preferred and should be encouraged and supported by the tax procedure legal framework.
The law should provide for protective measures to prevent taxpayers from frustrating tax collection efforts by taking either themselves or their assets out of the tax administration’s reach.
As a last resort, the tax administration should be able to compel the recovery of outstanding tax debts from taxpayers or certain third parties through different legislative measures.
Such powers should be complemented by adequate safeguards for taxpayers.
This note focuses on the key issues that should be taken into consideration in designing tax law provisions to support fair and effective tax collection.

Protective Measures to prevent removal of taxpayers or assets from tax administration reach.
Compelled Recovery mechanisms enabling tax administrations to recover outstanding tax debts from taxpayers or certain third parties.
The role of the tax procedure legal framework in encouraging voluntary payment.
Balancing enforcement powers with adequate safeguards for taxpayers.
Specific procedural and legal instruments referenced in keywords:
- clearance certificate, clearance mechanism
- Collateral
- Compelled Recovery
- Crisis Events
- Installment Arrangements
- IT system
- Legislation
- penalties regime
- Protective Measures
- Tax administration core functions
- Tax arrears management
- Tax Collection
- Tax law
- tax law provision
- Tax Liens
- tax procedure
- tax rulings regime

Design tax law provisions that prioritize voluntary compliance through supportive tax procedure frameworks.
Include legal safeguards to prevent taxpayers from placing themselves or assets beyond the reach of tax administrations.
Provide legislative grounds for compelled recovery from taxpayers and certain third parties as a last resort.
Ensure that enforcement powers are balanced with adequate taxpayer protections.
Consider specific mechanisms—such as clearance mechanisms, installment arrangements, and tax liens—within the legislative design to support effective collection.