Raising Tax Revenue: How to Get More from Tax Administrations?

43 Pages Posted: 30 Oct 2020

See all articles by Eui Soon Chang

Eui Soon Chang

Independent

Nikolay Gueorguiev

International Monetary Fund (IMF)

Elizabeth Gavin

International Monetary Fund (IMF)

Jiro Honda

International Monetary Fund (IMF) - African Department

Date Written: July 2020

Abstract

Can we empirically show the benefits of improving the practices and characteristics of tax administration agencies for revenue collection? While many country experiences suggest a strong link, there is little systematic empirical evidence on the matter. This paper analyzes the association between tax collections and tax administrations, using the novel dataset (ISORA). We find that tax performance is positively and strongly associated with the operational strength of tax administrations. Among emerging and low-income economies, countries at the top 25 percent (in terms of the operational strength) collect substantially larger tax revenues (by 31/4 percent of GDP) than countries at the lowest 25 percent, assuming other conditions are equal. Our results also suggest that adopting key administrative practices such as compliance risk management and use of third-party data is associated with stronger tax collections. Furthermore, larger staffing of a tax agency improves tax revenue up to a point. These findings have important policy implications, particularly during the unprecedented global pandemic situation.

Suggested Citation

Chang, Eui Soon and Gueorguiev, Nikolay and Gavin, Elizabeth and Honda, Jiro, Raising Tax Revenue: How to Get More from Tax Administrations? (July 2020). IMF Working Paper No. 20/142, Available at SSRN: https://ssrn.com/abstract=3721184

Nikolay Gueorguiev

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Elizabeth Gavin

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Jiro Honda

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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