World Bank Assessment and Diagnostic Toolkit

1. 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)

2. 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

3. The elusive quest for measuring performance in the public sector • 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 • 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.

4. Moving towards enhancing the “quality” of tax systems and modernizing revenue administration The Toolkit TTAP Political Economy of Tax Reform Natural Resource Taxation Subnational Governments and Municipalities Business Taxation and its Impact on Investment Climate TTAP: Tracking Tax Administration Progress

5. 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 benchmarking analysis, but it recognizes the fact that no one-size fits all.

6. 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

7. Combining complexity….. 91 (34 normalized values) Plus drill-down indicators Result and Output Indicators IAMTAX Evaluators Determine 190 Good Practices How Much do we Measure? IAMTAX Evaluators Determine 142 Computed Base Metrics Base Values 70 IAMTAX Evaluators Measure IAMTAX Computes

8. … WITH USER-FRIENDLY REPORTS AND GRAPHS (INTERACTIVE REPORT) 14 core strategic dimensions widely recognized as underlying values of developed tax administrations The Strategic Dimension View 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 The Objective View The Functional view Tax collection; taxpayer Services; tax audit; revenue Arrears management; tax Appeals; IT; HR….. The Practice / Performance View A Practice index and a Performance index that effectively summarize all findings in an XY chart. Tax Administration

9. Presenting results

10. Reference system is linked to the environment in which tax administration operates….. Key Objectives Strategic Dimensions Operational Level Simplification of tax legislation; Client/taxpayer orientation; Enhancing voluntary compliance; Extensive use of Information and Communication Technology; Segmentation of taxpayers; Application of risk based criteria to analyze and monitor tax compliance; Information as a fundamental asset of the tax administration; Emphasis on Human Resource Management; Increasing relevance of international taxation; Equity and transparency of tax system; Process orientation; Planning as a core element of tax administration; Increasing the analytical capacities of tax administration External communication policy, which fosters relations with the private sector and other stakeholders; Transparency, equity and simplification of tax legislation • Outcomes • Change in compliance behavior; • Increased level of voluntary compliance; • Outputs • No. of tax audits; • Tax disputes resolved; • Tax services provided; • Tax arrears collected; • Other Strategic Vision Core Business Processes Control Market segmentation (Tax audit function, revenue arrears management…) Mass Processes (Processing of tax returns, taxpayer services..) Taxpayer account Taxpayer registry Effectiveness e - Offices Third party information Banks Efficiency Inputs Human resources; budget; and infrastructure (physical and IT) Taxpayer services and external communication Environment

11. TRACKING TAX ADMINISTRATION PROGRESS (TTAP) Tracks improvement goals for the Tax Administration Monitor tax administration projects Produces easy to use progress reports on measurable goals IAMTAX External Assessment IAMTAX Self Assessment IAMTAX Diagnostic Tool TTAP Allows results-oriented planning based on actual objective measurements

13. Thanks for your attention Questions?