How can we better help governments to help citizens? Seeking feedback on best practices in building tax capacity
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In April, the World Bank Group joined forces with the International Monetary Fund (IMF), the Organisation for Co-Operation and Development (OECD), and the United Nations (UN) to form the Platform for Collaboration on Tax with the aim of providing better coordination and support to developing countries on tax matters. Among the responsibilities of this new group are to formalize regular discussions among our organizations on standards for international tax issues, strengthen our capacity-building support, deliver joint guidance, and share information on our ongoing work.
To that end, we have produced a short guidance note that we expect to present to the G20 in July: “Report on Effective Capacity Building on Tax Matters in Developing Countries”. In preparing this note, our experts have compiled research, reached into their extensive experience on the ground, and incorporated comments from country-level practitioners at a number of meetings – in Tanzania, South Korea, and Washington, D.C. – that were designed to highlight the developing-country perspective. But we know there is more to learn, and before we finalize this note, we would like to hear from you, whether you are a representative from a civil society organization, a tax official, or a citizen who is interested in how your government sets and collects taxes.
Deadline: July 8
Where to send feedback: GlobalTaxPlatform@worldbank.org
Next steps: Keep your eye on this space. While we are setting a short deadline for this particular project, we hope to keep the conversation going, and will engage with you on many of the initiatives we have planned.
Background
G20 Finance Ministers, in their communique of February 2016, called upon the IMF, OECD, UN and World Bank Group to “recommend mechanisms to help ensure effective implementation of technical assistance programs, and recommend how countries can contribute funding for tax projects and direct technical assistance, and report back with recommendations” at their July meeting. The four organizations, working jointly as the members of the new Platform for Collaboration on Tax—drawing on their individual experiences in delivering technical advice and their interactions with other providers of technical assistance, development partners, and especially country governments—have developed a series of recommendations and enabling actions in response to this request, which are laid out in this draft summary document. The Platform organizations seek comments from interested stakeholders on these recommendations by July 8. A longer underlying analysis, and supporting examples, will be included in the final report to the G20, which will take account of comments received in this consultation. This will be submitted for the July G20 Finance Ministers meeting.
The attached draft seeks to identify core elements of successful tax capacity building programs, as well as the enabling factors that help to produce such successes. The paper emphasizes the need for a supportive political and social environment for reform at the country level—to ensure a country-led reform supported by all key stakeholders: leading government officials, political and business leaders, civil society and the citizenry more generally. The international organizations and G20 countries must help to build this through well-designed support for revenue reform initiatives, including through the inclusion of appropriate incentives. Coherent revenue reform strategies are needed as part of development financing plans—as recognized in the Addis Ababa Action Agenda a year ago. And cooperation and collaboration among development partners—including regional tax organizations--at the country level will become even more important with the anticipated scaling up of support for work on tax capacity building. Further inclusion of developing countries in international discussions will help to foster the needed environment for revenue policy and administrative reforms.
Questions to consider
- The attached paper emphasizes the need for country-led and coherent revenue reform strategies, implemented over a period of years by committed governments providing sustained and visible political support, to underpin successful revenue improvement efforts. Does the draft imply the proper balance of roles for governments, technical development assistance providers, donor countries and agencies, and other stakeholders in this process?
- The paper emphasizes that both technical skills and especially managerial knowledge/skills are critical to success (Enabler 1.2). Do you agree that the latter are important and if so, do you have thoughts on how development partners can best assist countries to develop, retain and bring to bear such managerial skills?
- Are current tools for the effective measurement and evaluation of capacity support adequate (Enablers 2.2; 3)? If not, what can countries and development partners do to further improve their design and expand their use?
- Are there other factors not mentioned, or not sufficiently emphasized, in the paper that you think are important for successful capacity building and revenue system reforms?
Please do not restrict yourself to these questions; any other views you have on facilitating more effective capacity building by concerned governments and their development partners are sought.
Please respond with comments to:
GlobalTaxPlatform@worldbank.org This is a common comment box for all the Platform organizations.
Note: The blog post is authored by Jim Brumby on behalf of other representatives of the Platform.
Relative to your reach into the hinterland vis-a-vis the creation or supplemental tax programs employed by developing Nations I am hardly qualified to comment upon any economy except that of Haiti.
The WB executive is well aware of Haiti's elected body's on and off ability to govern in the sense of increasing the GNP.
On-going corruption is at the base of that economy's short-fall for the creation of taxes that would and should be supporting the National effort to increase services, maintain infrastructure, and reduce the need for constant international aid relative to ensuring the well being of the general population.
The taxable avenues that should/could be connected to a variety of programs were/are without any potential under the prior executive and current caretaker administration.
For an example, sanitation: currently at an all-time low in Haiti: garbage is generated at a ten to twenty fold pace that surpasses the State's ability, or want, to bring this scourge to health, both mental and physical, under some acceptable level of processing maintenance and control.
The WB would do well to seek alternatives to remedy this growing abuse of the environment in Haiti that is washing up upon the shores of other Caribbean and Central American countries while supporting the manifestation of disease and desecration of the population and environment in the source country.
This situation has been growing for decades. Laws that are in-place in Haiti have no effect; they are unenforceable for the sake of a pay-off. The neighboring Dominican Republic adds to the problem by manufacturing Styron-foam products that are forbidden in Haiti yet are commonly found everywhere and anytime.
The organized abuse of the natural environment in Haiti is a continuing disaster! River management is evident at some locations however the techniques utilized seem only to accelerate the erosion of soils rather than retention. Yes, consultants have been there and gone, authoring papers of suggestion that are only too well recognized by Haiti engineers who are routinely ignored by all actors in the scene of "aid".
In the meantime, reefs are suffocated under mountain soils that have become leached from the lack of stable and sufficient replanting of long ago harvested trees in support of the Charcoal industry that continues to wreck havoc upon most areas capable of producing the volume of hardwoods that end up in the cooking fires.
How to tax this? Not simple. Enforce the laws relative to the cutting down of mature trees and re-growth.
In doing so, introduce locally manufactured gas stoves that use a fuel not extracted from the soils of the Nation. Common measurement places the efficiency of gas stoves at a four-fold benefit versus that of charcoal and at less than half of the out of pocket cost.
But again, corruption, and the lack of an effective dove-tailed programs to employ those who service the charcoal industry lends no value to the weaning away of the Nation's want for this depleting fuel.
WB might encourage this through the Minister of the Interior's action towards implementing subsidized stove manufacturing nation-wide including the distribution and recharging of gas containers. It has been done before and failed.
Security: Haiti's GNP will never grow to even 60% of its potential without stringent and effective National Security at all levels including agriculture and environmental enforcement.
A recent attack around Port-au-Prince and Petion-Ville simply discouraged the commercial sector from inventory re-investment and other forms of taxable growth that yields revenues for the tax office, the DGI.
A like event occurred in the south at Cayes on May 16th when uniformed impostors invaded the Police Headquarters killing on-duty officers and setting off a vicious fire-fight that endured through the night until 0430 hours. (I was present.)
Prior to this event some three business owners were shot to death and robbed on three separate occasions in Cayes. More such events have occurred since in other cities.
The question of effective protection of the citizenry is rampant and has created a level of concern. Some owners have sent members of family abroad; not unlike some of the lawless interludes of the past.
Hence, lower taxable revenues and a real absence of tourism revenues and fresh investment for the growth of this hard-currency focused industry. Perhaps Haiti's budget has lost an entire year's total budgeted revenue due to the absence of security and real tourism since 2013-14.
The implemented but now stagnant airport enhancements and expansion of existing facilities and construction of new strips are again reaching into Haiti's economic future thus reducing needed fresh tax and private sector revenues. The goal-posts have been stolen!
"Haiti is open for business" is a standing joke without any of the supporting services, codes and enforcement properly in place. How may WB support the massive loans necessary to create the needed capital base?
Looking at the deplorable condition of post-earthquake 2010 Port-au-Prince it becomes painfully evident of the foot-dragging and false support by the so-called donating international entities. The NGO’s marched away with over 88% of the funds!
Today, there exists a void of immediate potential for Haiti to grow its revenues derived from taxes, fees and services that are not being protected for the common good of the Nation.
This is written as a low-level "Primer" for that which must eventually, and belatedly be undertaken in Haiti by the State’s yet to be realized and elected administration.
At best, Haitians and Internationals are suspicious of the current Care-Taker situation.
Please accept my view that Haiti is not a "Developing Economy"; it is however a “Deprived Economy”, and a deprived population, seemingly owing to old practices that survive and perpetuate themselves endlessly regardless of the current administration and the inter-play by the international sector.
To alter this situation will requires a thorough departure from current habits and further investment in Haiti's judicial and law-enforcement entities.
Think of it, how would anyone expect effective and honest law-enforcement that is paid below $50.00 US monthly? Everything else, and every other value becomes relative.
There is more yet to come.
Thank you