13 Tax administration
The tax administration indicator is defined as: the efficiency and effectiveness of tax collection (at the central/federal level). Effective tax systems can be viewed as a critical building block for increased domestic resource mobilisation which is essential for civil service effectiveness and good governance. “Successful tax extraction provides resources that enable the government to operate in other domains”, Fukuyama (2013) highlights “it is a necessary function of all states, and one for which considerable data exist”. The role of tax administration as the basis of government operations is made clear by the OECD (n.d.): “Strong tax administrations and sound public financial management help maximise the domestic resources that are necessary for government to function, to sustain social safety nets, to maintain long-term fiscal sustainability, and to free up fiscal space for pursuing socio-economics objectives”. Although priorities and circumstances vary widely across countries, the drive to elevate the collective standard of tax administration is of great importance. Holt and Manning highlight the importance of tax administration in measuring the effectiveness of public administration and it is one of the key functions highlighted by the World Bank (2012).
The tax administration indicator is comprised of six metrics and its structure is unchanged from the 2017 Pilot edition of InCiSE. The data sources for the indicator are:
- OECD’s Tax Administration Comparative Information Series [2015].
- The World Bank’s ‘Doing Business’ Index (WB) [2018].
| Metric | Source | Type | Public sector proxy | Data transformation | Weighting within indicator | Definition of the source metric (e.g. question wording) | ||
|---|---|---|---|---|---|---|---|---|
| In theme (A) | Theme (B) | Total (C=A*B) | ||||||
| Efficiency of collection | ||||||||
| Cost of tax administration | OECD | Government assessment | No | Inverted | 50.0% | 33.3% | 16.7% | Administrative costs as a proportion of net revenue |
| Tax debt | OECD | Government assessment | No | Inverted | 50.0% | 33.3% | 16.7% | Total tax debt as a proportion of net revenue |
| Taxpayer experience | ||||||||
| Time to pay (business) | WB | Expert assessment | No | Inverted | 100.0% | 33.3% | 33.3% | The time it takes businesses to pay taxes |
| Digital tax services | ||||||||
| Online personal tax returns | OECD | Government assessment | No | None | 33.3% | 33.3% | 11.1% | The percentage of tax returns e-filed during the last fiscal year for personal taxes |
| Online corporate tax returns | OECD | Government assessment | No | None | 33.3% | 33.3% | 11.1% | The percentage of tax returns e-filed during the last fiscal year for corporate taxes |
| Online VAT returns | OECD | Government assessment | No | None | 33.3% | 33.3% | 11.1% | The percentage of tax returns e-filed during the last fiscal year for VAT taxes |
| Tables 3.11.A & 3.11.B in the original 2019 publication | ||||||||
13.1 Imputation of missing data
None of the 38 countries selected for the 2019 edition of InCiSE have completely missing data for the tax administration metrics. As a result the imputation of missing data for the tax administration metrics is based solely on the data within the indicator.
13.2 Changes from the 2017 Pilot
There are no changes to the structure of the tax administration indicator.