Breaking barriers: Transforming tax and customs administrations for women and men

Tax and customs administration reform may seem like a second (or third, or fourth) order concern when thinking about how to facilitate women's economic activities in low- and middle-income countries. In settings with significant gender disparities in income, property or asset ownership, and firm ownership (particularly in the formal sector), how much impact can a revenue administration have by considering gender equality objectives in its work?  The answer is potentially a lot. 

The implementation of tax policies by a country's tax and customs administration affects who is taxed, audited, fined, and how. In low- and middle-income countries, revenue officials frequently represent the sole government contact for taxpayers and traders, exercising significant discretion in tax and customs policy application. This relationship is foundational to good tax systems’ principles: efficiency, certainty, simplicity, and fairness. Not surprisingly, improvements in tax administration help increase tax revenues by bolstering tax capacity (Benitez et al. 2023).

Moreover, tax and customs administrations can shape economic activity, influencing who works, starts businesses, and trades. Braunerhjelm and Eklund (2014) found that increased tax administrative burdens (as measured by (i) the number of tax payments required each year; and (ii) the time needed to pay these taxes) significantly reduced business entry rates across 118 countries.  

Gender-neutral actions by tax administrations can have different impacts on women and men due to varying economic behaviors and social arrangements  (Coelho et al. 2022; OECD 2022). For example, the adoption of e-filing and e-payment systems may inadvertently raise tax compliance costs for women with lower digital literacy or technology access. Conversely, digitalization could reduce women's compliance costs by minimizing the need for in-person interactions, beneficial in contexts where women face harassment or mobility issues.

A recent Global Tax Program Knowledge Note reviews literature on gender and tax administration highlighting efforts to enhance services for women and the implications of a more gender-balanced workforce. Integrating gender equality objectives into tax and customs administration could improve experiences for all taxpayers and traders.    

Three key areas of focus include:

• Gender-disaggregated data: Customized services for different taxpayer and trader segments (think special tax administration units devoted to large taxpayers, now common in many countries, or taxpayer education programs for new taxpayers) are recognized as necessary by many administrations. However, the lack of gender-disaggregated administrative data hinders understanding the distinct needs of women and men, particularly in lower-income countries.  For example, the African Tax Administration Forum reports only Uganda collects gender-disaggregated data through taxpayer registries. More data would allow for more tailored strategies to facilitate women and men’s economic activities (e.g., taxpayer education programs to address women's low digital literacy).
   
• Gender-specific interactions: Despite data limitations, studies document distinct interactions between women, men, and tax administrations. How the discretion of tax and customs administration in developing countries impacts women and men differently is an empirical question, and we can think of five broad areas of consideration:

• Gender (im)balance in workforce: Gender disparities in tax and customs workforces are common, with ratios like 1.8:1 male to female staff reported in the African Tax Outlook 2022. These imbalances are more pronounced at senior levels. Studies suggest that female frontline staff are less likely to engage in corruption and are often preferred by women seeking assistance.  Workplace reforms, such as equal recruitment, retention, compensation and promotion practices and safer environments, are necessary to increase women's representation (see Baer et al. 2023 for an overview and Komatsu and Touqueer 2023 for a case study).

One of the best parts of writing this Note was learning about recent World Bank projects supporting gender equality in tax and customs reforms, some of which are discussed here on the Global Tax Program’s Gender Equality & Tax Reform page. The Knowledge Note serves as a call to action for researchers, policymakers, and revenue officials for more rigorous study of gender-differentiated consequences or implications of revenue policies and administration, and what policies can reduce regressive outcomes. 

This blog is the first in a series of blogs related to tax and broader domestic resource mobilization issues. The upcoming ones will explore issues such as how lower-income countries can mobilize more taxes, what the equity implications of taxation are in low- and middle-income countries, and insights into value-added taxes from administrative data.