Quantifying the Revenue Yields from Tax Administration Reforms
IMF Working Papers, November 10, 2023
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- Quantifying the Revenue Yields from Tax Administration Reforms
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Bibliographic details
- Authors: Hassan Adan, Jean-Marc Atsebi, Nikolay Gueorguiev, Jiro Honda, Manabu Nose
- Published: November 10, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400258923.001
Summary and purpose
- Purpose: Estimate revenue yields associated with various tax administration (TA) capabilities to fill a gap in quantified evidence on TA reforms’ impact on domestic revenue mobilization.
- Data sources: International Survey on Tax Administration (ISORA), Tax Administration Diagnostic Assessment Tool (TADAT), and TA reform episodes datasets (identified by Akitoby et al., 2020).
- Methods: Hausman-Taylor cross-country panel regression and an event study for specific TA reform episodes.
Key quantitative findings
- An increase in overall TA strength from the 40th percentile to the 60th percentile is associated with an increase in tax revenue by 1.8 pp. of GDP (with a 95 percent confidence range of 0.5‒2.6 pp. of GDP).
- The event-study assessment shows sustained TA reforms led to an increase in tax revenues between 2 to 3 pp. of GDP.
- Revenue yields increase over time to more than 3 pp. of GDP after the 6th year following a comprehensive reform.
- Country case evidence cited: Jamaica, Rwanda, and Senegal align with the event-study finding of 2 to 3 pp. of GDP increases.
Methodological notes
- Regression approach: Hausman-Taylor cross-country panel regression applied to ISORA data.
- Complementary approach: Event study analysis of specific TA reform episodes drawn from the TA reform episodes dataset.
Specific TA measures with significant impact
- Strengthening compliance risks management.
- Enhancing public accountability.
- Establishing Large Taxpayer Offices (LTO).
- Strengthening accountability and transparency.
- Enhancing timely filing of tax declarations.
Implications for TA reform policy
- Comprehensive and sustained TA reforms can deliver measurable revenue gains in the range of 1.8 pp. to more than 3 pp. of GDP over time.
- Targeted reforms in compliance risk management, public accountability, LTOs, transparency, and filing timeliness are identified as high-impact measures to prioritize in reform programs.
IMF Working Paper: Quantifying the Revenue Yields from Tax Administration Reforms, Hassan Adan; Jean-Marc Atsebi; Nikolay Gueorguiev; Jiro Honda; Manabu Nose; November 10, 2023.
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