Managing tax administration reforms

Transcription

1 Fiscal Affairs Department Effects of Good Government, by Ambrogio Lorenzetti, Siena, Italy, Managing tax administration reforms It all starts with a scoping mission Rene Ossa Fiscal Affairs Department - Revenue Administration 1

2 What I will talk about? 1. Undertaking a tax administration assessment The scoping mission 2. FAD tax administration assessment tools Introduction to RA-FIT, TADAT, RA-GAP 3. Strategy formulation Main challenges. 2

3 The scoping mission Pre-mission Questionnaire Questionnaire - timeline and objective Sent 4 weeks prior to the start of mission. Requests for numerical data and other information critical to the assessment process. Requests annual reports and other relevant documents. Questionnaire standard requests. Organization and management features: Taxpayers development services current initiatives Audit and investigation capacity and results. Arrears management strategy and results Legal, regulatory and dispute resolution framework Human resources and training management capacity Register of taxpayers adequacy and accuracy Effectiveness of tax returns and payment accounting systems Robustness of information and communication systems 3

4 The scoping mission During the Mission Opening meeting Acquaint senior officials with the objectives and outputs of the mission Seek their insights, specific guidance and expectations. Discuss mission work program. Meetings with key tax departments Go through the questionnaire and gather information and evidence in respect of each tax function. Discuss preliminary findings and recommendations to gauge counterparts feedback. Identify key challenges and priorities for reform Risk driven Resources available TA capacity availability and absorption 4

5 The scoping mission Post-Mission Finalize the Report Consider country s comments and feedback and make changes as appropriate. Consider Area department comments and make changes as appropriate. Send the report to the management First, the draft report is sent to the advisory committee for quality review. Second, the draft report incorporating country, Area department and advisory committee s comments and feedback is sent to the division chief for final review. and clearance Send the report to the country After clearance by the management, the team sends the final report to the country.. The team should seek permission of the country authorities to publish the report (disclosure policy) 5

6 What I will talk about 1. Undertaking a tax administration assessment The scoping mission 2. FAD tax administration assessment tools Introduction to RA-FIT, TADAT, RA-GAP 3. Strategy formulation Main challenges. 6

7 FAD s Fiscal Assessment Tools RA-FIT RA-GAP TADAT 7

8 RA-FIT PURPOSE AND BENEFITS RA-FIT VISION Elevate the importance of revenue administration performance reporting and measurement, globally; Establish RA-FIT as the single common online platform used by all institutions ; Gather data across a large number of tax and customs administrations to permit further analytical work, such as: Understanding historical performance; Establishing baselines by income group and other groupings; Identifying trends; Flagging policy and administrative inefficiencies; Refining performance measures to improve robustness; and Providing sufficient data to facilitate focused and in-depth research. Assist in developing international revenue administration performance, measurement, and reporting standards; 8

9 RA-FIT PURPOSE AND BENEFITS RA-FIT BENEFITS Provide a service to IMF members; Provide information for analysis for countries and for IMF (for improved cross-country/regional comparisons); Improve quality of revenue administration TA delivered (data in advance, better prep); Assist in developing an empirical basis for measuring revenue administration TA delivered ; Provide necessary data to better calibrate other FAD tools (TADAT); Elevate the importance of revenue administration performance reporting and measurement 9

10 TADAT Performance Outcome Areas (POAs) The tax administration is transparent in the conduct of its activities and accountable to the government and the community. All businesses, individuals, and other entities that are required to register are included in a taxpayer registration database. Information held in the database is complete and accurate. Tax administration operations are efficient and effective in performing key functions and achieving expected outcomes. The tax dispute resolution process is independent, accessible to taxpayers, and effective in resolving disputed matters in a timely manner. The tax administration s management of compliance risks results in higher levels of voluntary compliance and community confidence in the tax administration. Taxpayers have the necessary information and support to voluntarily comply at a reasonable cost to themselves. Taxpayers report complete and accurate information in their tax returns. Taxpayers file returns on time. Taxpayers pay their taxes in full on time. 10

11 TADAT PURPOSE AND BENEFITS Allows a better identification of the relative strengths and weaknesses in a tax administration. Understanding the strengths and weaknesses of a tax administration is critical to grasp what could be improved, and what is working well. Facilitates a shared view among all the stakeholders (Government authorities, international organizations, bilateral aid agencies and technical assistance providers ). A better understanding of what works and what does not, helps focus on setting the reform objectives, establishing priorities and sequencing implementation. 11

12 TADAT- HIERACHY OF PERFORMANCE MEASUREMENT Each dimension scored separately on a scale of A to D 9 POAs Each Performance Outcome Areas has 1-4 indicators 26 Indicators All indicators have 1 4 dimensions 51 Dimensions Basis of TADAT scoring POAs are not scored Indicator scores are based on scores for the dimensions some are averaged, others are based on weakest link 12

13 TADAT PURPOSE AND BENEFITS A Tax administration demonstrates strong performance and follows internationally accepted good practices in that dimension. B Tax administration shows sound performance fairly close to internationally accepted good practices in that dimension. C Tax administration just meets the minimum performance standards in that dimension. D Inadequate performance, where the minimum standards set in C are not met. OR Insufficient information to determine level of performance. 13

14 Revenue Administration Gap Analysis Program (RA-GAP): Visualizing the tax gap Potential Administrative Effectiveness 100 % Current Effectiven ess Compliance Gap Actual Collections Policy Gap Current Normative Structure Structure Potential Tax Structure Potential Collections 14

15 RA-GAP PURPOSE AND BENEFITS What is the RA-GAP? Revenue Administration s Gap Assessment Program is a systematic evaluation of a revenue administration s operations designed to assess their effectiveness in collecting taxes A long-run goal of the program is to build local capacity for execution of a similar domestic program. The ultimate goal of this assessment is to be able to estimate the tax gap. 15

16 RA-GAP PURPOSE AND BENEFITS What is the TAX-GAP? Loosely defined the tax gap is the difference between potential collections and actual collections. The gap would incorporate reduction in potential collections due to the policy structure (policy gap). Difference between potential collections and actual collections given the current policy framework. Revenue losses could directly tie to the effectiveness of the administration (compliance gap). 16

17 RA-GAP PURPOSE AND BENEFITS RA-GAP goes beyond an estimate of the tax gap One problem with a tax gap estimate is it doesn t tell you how to fix it. RA-GAP not only estimates the size of the tax gap, it narrows down which group of taxpayers are contributing the most to the gap, and identifies risk factors Estimating the tax gap requires the use of detailed tax record data. This allows for breaking the gap estimate down across various segments of taxpayers 17

18 What I will talk about 1. Undertaking a tax administration assessment The scoping mission 2. FAD tax administration assessment tools Introduction to RA-FIT, TADAT, RA-GAP 3. Strategy formulation Main challenges. 18

19 Strategy formulation From diagnosis to strategy Ensuring the needed complementary between tools and scoping missions FAD FAD Project managers are systematically informed of TADAT/RA-FIT missions in countries of their responsibility Project managers participate in to the TADAT/RA-GAP missions or at least are members of the TADAT/RA-GAP report advisory committee. Post-TADAT/RA-FIT TA missions are.requested to report on TADAT/RA- FIT findings and progress Field assessment missions are requested to use at the extent of possible RA-FIT data to help members countries improve the data collection and analysis. Countries Develop a proper understanding of the rationale behind every diagnostic tools to achieve expected results. Ensure that request for some diagnostic missions are consistent with current tax administration TA needs to avoid duplication or waste : Cautiously review tax administration reforms plans following diagnostic missions to ensure that new measures developed are sustainable and consistent with the ongoing reform strategy 19

20 Strategy formulation From diagnosis to strategy TA scoping missions pave the way to the following points: Usually begins with an environmental analysis - a means to understand where we are now. Can mean environmental scans and SWOT analyses. Reflects on our current processes, programs and their given strengths and weaknesses. What is the purpose of a each of the tools that can be used to help us analyze our business today? What do we want to continue to do and what do we need to change? What are key priorities for the government and the administration? Identify and articulate the main goals. Usually on a 3 to 5 year horizon. Published so administration is held to account 20

21 Strategic Management System STRATEGIC MANAGEMENT SYSTEM Environmental Analysis Foundation Statements Mission/Vision/Values Strategies (4-6 broad strategies) Strategic Objectives (2-4 for each strategy) Operational Plans Implementation of Operational Plans Monitoring and Performance Indicators Feedback STRATEGIC PLAN BUSINESS PLAN 21