The Reform of Tax Administration

IMF Working Papers, February 1, 1995

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The Reform of Tax Administration

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Bibliographic details

• Authors: Anthony J. Pellechio, Vito Tanzi
• Published: February 1, 1995
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451843941.001

Summary

• Tax administration determines a country’s real (or effective) tax system.
• Many tax administrations do not function optimally and distort the intention of tax laws.
• Effective and efficient tax administration is necessary for taxation to influence the allocation of resources, the distribution of income, and macroeconomic stability and growth.
• The paper addresses tax administration reform by:
  • Describing briefly the causes for inefficient tax administration.
  • Identifying the essential elements of successful reform.
  • Presenting measures to improve the tax administration.
• The common thread of a reform strategy is to focus administrative resources on problems in the tax collection system through:
  • Promotion of voluntary taxpayer compliance.
  • Adoption of a logical sequence of procedures for efficiently identifying and handling instances of noncompliance.

Causes of Inefficient Tax Administration (as framed in the paper)

• Tax administrations in many countries do not function optimally.
• Such dysfunction can lead to distortion of the intention of tax laws.
• Inefficiencies undermine the intended effects of taxation on resource allocation, income distribution, and macroeconomic outcomes.

Essential Elements of Successful Reform

• Focus administrative resources on problem areas within the tax collection system.
• Promote voluntary taxpayer compliance as a key objective.
• Implement a logical sequence of procedures to identify and address noncompliance efficiently.

Measures to Improve Tax Administration (high-level themes from the paper)

• Prioritize problems in tax collection to allocate administrative capacity effectively.
• Encourage taxpayer compliance through measures that reduce barriers to voluntary compliance.
• Design and adopt procedural sequences for detection and resolution of noncompliance to increase administrative efficiency.

Subject and Keywords

• Subject: Income tax systems, Revenue administration, Tax administration core functions, Tax collection, Taxes, Value-added tax
• Keywords: administration resource, delinquent taxpayer, goal of tax administration reform, Income tax systems, procedures of the home countries, reform of the tax administration, Tax administration core functions, tax administration of a country, tax administration procedure, tax administration service, tax administrations of the world, Tax collection, taxpayer compliance, taxpayer transaction, taxpayers unit, Value-added tax, VAT taxpayer, way taxpayer, WP