World Bank Assessment and Diagnostic Toolkit

• “Theory is when you know everything but nothing works. Practice is when everything works but nobody knows why. We have put together theory

and practice: nothing is working… and nobody knows why” (Albert Einstein Jr)

Cosmologists and Pilots: a tale of two strategies

”…. Amid the confusion, two kinds of maps evolved: simple but accurate “portolan” charts based on actual observations of pilots, and far more elaborate concoctions of cosmographers. The charts simply showed how to sail from point to point; the cosmographers tried to include the entire cosmos in their schemes. The cosmographers relied primarily on mathematics for their depictions, but the pilots relied on experience and observation. The pilots’ charts covered harbors and shorelines; the cosmographers’ maps of the world, filled with beguiling speculation, were often useless for actual navigation….

Although it might be expected that pilots worked closely with cosmologists, that was far from the case. Pilots were hired hands who occupied a lower social stratum. Many of them were illiterate and relied on simple charts that delineated familiar coastlines and harbors, as well as on their own instincts regarding wind and water. The cosmologists looked down on pilots as “coarse men” who possessed “little understanding”. The pilots, who risked THEIR lives at sea, were inclined to regard cosmologists as impractical dreamers. Explorers setting out on ocean voyages to distant lands needed the skills of both; they took their inspiration from cosmologists, but they relied on pilots for execution”.

Over the Edge of the World, Laurence Bergreen

• Delivering better results from revenue administration reform interventions …..

….requires explicit evidence to enable measuring these results in practice• Revenue administration reform is highly-context dependent• Political economy factors matter• Tax policy + revenue administration= the real policy• Developing performance indicators that try to measure

the extent to which tax structures are efficient, equitable, effectively administered, and promote the social contract between citizens and the state.

The elusive quest for measuring performance in the public sector

The Toolkit

Political Economy of Tax Reform

Natural Resource Taxation

Subnational Governments and Municipalities

Business Taxation and its Impact on Investment Climate

TTAP

Moving towards enhancing the “quality” of tax systems and modernizing revenue administration

TTAP: Tracking Tax Administration Progress

Dealing with risks….• The WBG has developed a number of management tools in

order to facilitate revenue administration managers identifying internal and external risks and dealing with them

• Models are built on benchmarking analysis and can also be used as diagnostic tools.

• These tools place strong emphasis on a country’s context and its evolving nature by proposing a framework to better accommodate changes in the country’s environment

• The model is built on benchmarking analysis, but it recognizes the fact that no one-size fits all.

Making benchmarking effective: risks and opportunities

Better understand the strengths and limitations of existing systems and practices in order to guide reform efforts

Identify opportunities, priorities, and directions for reform

Judge reform programs

Need to adopt a systemic approach and have a broader understanding of the overall tax system environment

Base Values Computed Base Metrics

IAMTAX Evaluators MeasureIAMTAX Computes

IAMTAX Evaluators Determine

Good Practices

IAMTAX Evaluators Determine

142

70

190

91 (34 normalized values)

Result and Output

Indicators

How Much do we Measure?

Plus drill-down

indicators

Combining complexity…..

The Strategic Dimension View

The Objective View

The Practice / Performance View

14 core strategic dimensions widely recognized as underlying values of developed tax administrations

6 key objectives: (i) transparency, equity, and simplification of tax legislation; (ii) strategic vision; (iii) effectiveness; (iv) efficiency; (v) taxpayer services and external communication; and (vi) control

A Practice index and a Performance index that effectively summarize all findings in an XY chart.

Tax Administration

The Functional viewTax collection; taxpayerServices; tax audit; revenueArrears management; taxAppeals; IT; HR…..

… WITH USER-FRIENDLY REPORTS AND GRAPHS (INTERACTIVE REPORT)

Presenting results

Reference system is linked to the environment in which tax administration operates…..

A. Simplification of tax legislation;B. Client/taxpayer orientation;C. Enhancing voluntary compliance;D. Extensive use of Information and

Communication Technology;E. Segmentation of taxpayers;F. Application of risk based criteria to

analyze and monitor tax compliance;

G. Information as a fundamental asset of the tax administration;

H. Emphasis on Human Resource Management;

I. Increasing relevance of international taxation;

J. Equity and transparency of tax system;

K. Process orientation;L. Planning as a core element of tax

administration; M. Increasing the analytical capacities

of tax administrationN. External communication policy,

which fosters relations with the private sector and other stakeholders;

Key Objectives Strategic Dimensions Operational Level

Outputs• No. of tax audits;• Tax disputes resolved;• Tax services provided;• Tax arrears collected;• Other

Outcomes• Change in compliance

behavior;• Increased level of

voluntary compliance;

Core Business Processes

Mass Processes (Processing of tax returns, taxpayer services..)

Taxpayer registry

Market segmentation (Tax audit function, revenue arrears

management…)

Taxpayer account

Environment

InputsHuman resources; budget; and infrastructure

(physical and IT)

e - Offices Third party information Banks

Transparency, equity and

simplification of tax

legislation

Strategic Vision

Effectiveness

Efficiency

Taxpayer services and

external communication

Control

IAMTAX External Assessment

IAMTAX Self Assessment

IAMTAX Diagnostic Tool

Tracks improvement goals for the Tax Administration

Monitor tax administration projects

Produces easy to use progress reports on measurable goals

Allows results-oriented planning based on actual objective measurements

TTAP

TRACKING TAX ADMINISTRATION PROGRESS (TTAP)

Thanks for your attentionQuestions?

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