April 15 is the date that Americans have to send in their tax returns. Many folks scramble at the last minute to get their returns post-marked by this date or pay penalties on their taxes. (Of course, things got easier this year for American employees of international organizations after the release of the Geithner edition of TurboTax.) But in celebration of tax day, I thought I'd share a few data points from tax regimes in other parts of the world.
Until recently, there was not much data available on the cost of tax compliance outside of OECD countries. But a recent note from the World Bank on tax compliance in South Africa, the Republic of Yemen, Ukraine, and Peru contains some new data that helps reveal how regressive the cost of tax compliance is in many countries.
The figure below shows just how regressive tax compliance was until recently in South Africa—smaller firms fall to the left on the X-axis, and as you can see from the downward sloping line, they pay a substantially higher percentage of their total turnover in compliance costs. Fortunately, South Africa has taken notice and started introducing a system that will make compliance much simpler for smaller businesses. The threshold for paying VAT has been raised, and small businesses can opt into a new regime based on a turnover tax. Finally, something worth celebrating on tax day!