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 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 be nch marking 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 Measure IAMTAX Computes IAMTAX Evaluators Determine Good Practices IAMTAX Evaluators Determine (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 view Tax collection; taxpayer Services; tax audit; revenue Arrears management; tax Appeals; 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 administration N.External communication policy, which fosters relations with the private sector and other stakeholders; 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 administration N.External communication policy, which fosters relations with the private sector and other stakeholders; Key Objectives Strategic DimensionsOperational 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 Inputs Human 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 attention Questions? 13