GIFT General Stewards Meeting Washington DC, October 10th 2017 Guatemala 2015-2016: a case of tax administration recovery reform lead by civil society Washington DC, October 10th 2017

The problem April 17th, 2015: former and current tax/customs administration (SAT) authorities arrested, facing corruption charges Just the first actions to dismantle a whole corruption network in customs Months later investigations revealed that President, Vice-President, high government officials, businessmen, judges, etc., were part of it As a result, by September 2015 President Pérez Molina and Vice- President Roxana Baldetti had resigned, were arrested and on trial facing corruption charges, together with many others The whole Government was in crisis SAT was the “epicenter”, in severe institutional disorder Tax collection fell and taxpayers moral was at critical point

A route for solution Huge protests and demonstrations erupted all over the country, a movement then known as “La Plaza” (The Square) Icefi joined in, but envisaged that protests should be complemented with a proposal for the SAT’s recovery Danger was that everyone will find a –legitimate- excuse to resist paying taxes As fast as May 2015 (just 1 month after the crisis started), Icefi presented the first version of its proposal for a Roadmap for SAT’s recovery Opened a website calling for support among civil society Many CSO and even individual citizens joined Icefi’s proposal, some suggesting changes and improvements

Icefi’s proposal First part: a sound and technically solid diagnosis of the tax/customs administration Priority was given to governance failures within the institutional design Second part: proposal Short term actions: those possible with current legal and institutional framework Medium term actions: those requiring changes in rules and other administrative measures Long term actions: requiring legal reform and full structural overhaul New governance model solving lack of responsibility and conflict of interests

Icefi’s proposal Second part: proposal Who should be responsible, how much time was required and what kind and amount of resources its implementation required A reform to SAT’s Organic Law draft was included, insisting that legal reform was just a part of the recovery effort Serious strenghthening of SAT powers: banking secrecy regulation for tax puroses and compliance of OECD’s fiscal transparency global forum standard Strict fiscal transparency and probity controls: New stronger rules for public information access, open data, asset and conflict of interests statements disclosure for high officials and other probity measures, transparency for revenue forecasting, disclosure of institutional performance reports, etc.

Results Icefi presented its Roadmap proposal on February 2016 The new Government took office in January 2016, and the MOF prepared its own proposal to reform SAT Organic Law Congress announced its interest in the reform, and call the Government and Icefi to present their proposals Very important: 2 proposals, Government and CS, equal in technical strength On July 2016, Congress approved a version that took the best of the two proposals Icefi and other CSO took very active roles during discussions and public hearings

Conditions for success Strong technical capability in CSO: able to produce proposals at the same or even higher level than the Government’s Independence and credibility are central Public and CSO support: Icefi received a lot of critics: public support for the proposal was paramount to Congress to “feel” the pressure High media profile and capacity to explain the proposal in plain language: the common citizen must understand it Contacts and political action capabilities: the proposal must reach Congress or other decision taking spaces

Thank you very much!