## Tax Farming: A Radical Solution for Developing Country Tax Problems?

_IMF Working Papers, September 1, 1992_

## Source details

**Canonical URL:** [Tax Farming: A Radical Solution for Developing Country Tax Problems?](https://www.imf.org/en/publications/wp/issues/2016/12/30/tax-farming-a-radical-solution-for-developing-country-tax-problems-820)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/tax-farming-a-radical-solution-for-developing-country-tax-problems-820/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/30/tax-farming-a-radical-solution-for-developing-country-tax-problems-820/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/30/tax-farming-a-radical-solution-for-developing-country-tax-problems-820/bundle-manifest.json)

## Bibliographic details
- Authors: Peter Stella
- Published: September 1, 1992
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451960327.001

---

### Summary and central claim
- Systemic tax administration problems in many developing countries have led to a search for radical solutions.
- Tax farming is a system wherein the right to collect taxes is auctioned off to the highest bidder.
- An analysis of the historical experience with tax farming shows that its purported administrative efficiency is largely illusory.
- While certain aspects of tax administration may be suitable for privatization, the classic form of tax farming would appear to have little attraction for a modern state concerned with justice and equity.

### Key findings and evidence
- Tax farming’s administrative efficiency is characterized in the analysis as "largely illusory."
- Historical experience forms the basis of the assessment that classic tax farming is unattractive for modern states focused on justice and equity.
- The working paper frames tax farming as a "proposed solution" to systemic tax administration problems in developing countries, not as a concluded policy recommendation.

### Policy implications and recommendations
- Privatization may be appropriate for certain aspects of tax administration (the paper suggests selective privatization rather than full tax farming).
- The classic form of tax farming is implied to be unsuitable for states that prioritize justice and equity in taxation.
- Policymakers should weigh administrative considerations against distributive and fairness objectives when evaluating privatization or outsourcing of tax functions.

### Subject areas and keywords (as provided)
- Subjects: Agricultural tax, Financial institutions, Loans, Revenue administration, Tax administration core functions, Tax collection, Tax incentives, Tax law, Tax policy, Taxes
- Keywords: Agricultural tax, credit problem, government collection, government relationship, government salary schedule, government's objective, Loans, North Africa, Tax administration core functions, Tax collection, tax collector, tax farming, Tax law, WP

---


_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/tax-farming-a-radical-solution-for-developing-country-tax-problems-820_