BUILDING EFFICIENT TAX ADMINISTRATIONS TOWARDS PROMOTING NATIONAL & REGIONAL DEVELOPMENT

1. BUILDING EFFICIENT TAX ADMINISTRATIONS TOWARDS PROMOTING NATIONAL & REGIONAL DEVELOPMENT 20TH General Assembly and Technical Conference of COTA, Belize City, Belize, July 21-24 2008

2. Measuring Staff Performance and Evaluation of Performance in a Modern Tax System

3. Three main areas of examination • Criteria for a modern tax administrative system • Evaluation of a tax administration system • Measuring staff performance within a modern tax administrative system

4. What makes a tax administrative system modern? Does one exist and if it does what does it look like/what are its features Several studies have been done to determine this state

5. Criteria used to determine a good administrative system Level of automation Integration of data – especially with Customs Management accountability All operations places the taxpayer at the centre Staff readiness to deal with the taxpayer – Training Willingness to benchmark with leaders in tax administration e.g. New Zealand, Canada

6. Primary Goal of a tax administrative system To ensure compliance with tax laws

7. Compliance areas (within the Jamaican system) Promoting voluntary compliance becomes a primary concern – dependent on: How TA interact with taxpayers How employees impact public perception of the tax system

8. Additional compliance areas Ease of payment Enforcement - Identification of non-compliance risks

9. Evaluating a Tax Administration • In evaluating a tax administration one must evaluate the achievements of the strategic direction/goals of the organization and other subsidiary performance related indices

10. STRATEGIC DIRECTION Strategic direction guided by : (a) Road Map (b) Strategic Plan –aligned to road map

11. Knowledge and Understanding of the Environment A TAX COMPLIANCE MODEL • Extend to Marginalized • Recognize Mutual Obligation (rights and obligations) The Road Map’s Conceptual Framework • Visible (Field Work) • Lower Compliance Burden (quality of service, ease of payment) • Firm yet Fair Risk Assessment ENFORCEMENT • Risk-based SERVICE Effective Segmentation Customer Awareness EDUCATION • Share Information • Build a Culture of Compliance • Increase Knowledge of Obligations

12. In analysing our compliance risk factors, we will examine the various forms of Taxpayer Behaviour which result in: Failure to Register Failure to File Returns Failure to Properly Report Tax Liabilities and Failure to Pay Taxes When Due

13. ATTITUDE TO COMPLIANCE High Do Not Want To Comply But Will If Given Due Attention Consistently Succeed In Complying Strategies Aimed at Creating Downward Pressure Make It Easier To Comply Low Compliance Strategy based on Attitude COMPLIANCE STRATEGY Have Decided Not To Comply Use The Full Force Of The Law Enforce By Detection And Action Level of Compliance Cost Try To Comply But Do Not Always Succeed Assist In Complying

14. Strategic Objectives Tax Administration Collect the Revenue Due EFFICIENCY (Cost of Collecting) EFFECTIVENESS (Equitable Collection Systems) IRD CD Improve Compliance Service Education Enforcement TAAD TAD Improve Information and Communication Technology Processes TASD Improve Organization and Management ODG

15. Tax Administration Collect the Revenue Due EFFICIENCY (Cost of Collecting) EFFECTIVENESS (Equitable Collection Systems) IRD TAAD CD Service Education Enforcement TASD ODG TAD Compliance Objective • Taxpayer Service • Cashiering System • “Floor walking” • Forms Completion • Taxpayer Accounts • Taxpayer Education • Taxpayers Surveys • Payment Facilitation • Refund Processing • Objections Processing • Taxpayer registration • Cashiering • Taxpayer Service (SD&TT) • Payment Facilitation • Returns Processing • Taxpayer Assistance/ Education • Auditing • Enforcement • Risk management • Surveillance • Office Compliance • Field Compliance • Investigations • Street Surveys • Taxpayer Accounts • Line Officer • Operations • Cashiering • “Floor walking” • Forms Completion • Trade Facilitation • Taxpayer Education • Taxpayer Surveys • Payment Facilitation • Taxpayer Audit • Taxpayer Assessment • Audit Selection & Review • Audit Services • Excise Operations • Tax Fraud Investigation • Compliance (SD&TT) • ESOP, Superannuation Funds & Exempt Orgs. Review Improve Compliance • Legal Support Services • Litigation • New/Amended Legislation • Taxpayer Registration • Integrated Research • International Relationships • Integrated Strategies • Integrated Projects • Agency Contact • Integrated Research Findings • Integrated Strategies • Integrated Projects • Physical Environment • Taxpayer Registration • Public Education • Public Relations • Public Surveys • Tax Help • Taxpayer Education • Tax Admin Website • Professional Hearings • Service Standards • Independent & Professional Case Judgement • Investigation/Review of Waiver Applications

16. Tax Administration Collect the Revenue Due EFFICIENCY (Cost of Collecting) EFFECTIVENESS (Equitable Collection Systems) Technology Objective IRD TAAD CD • ITSTS • Cashiering • Risk Analysis • Brokers • Manifest • Import Processing • Export Processing • Auditing • Warehouse Operations • Business Process Re-engineering • Refunds Processing Objections • Returns Processing • Expenditure Accounting • Revenue Accounting • E- Transactions/ Payments • ESOP • Superannuation • Exempt Organizations • Valuation • Cashiering • Tax Fraud Investigations • ITSTS • Cashiering • AMVS • MV Title Processing • Driver’s Licence • Property Tax • TCC • TRN • Business Process Re-engineering • Refunds Payment Processing • Compliance • Taxpayer Accounting • Fact of Filing • Fact of Registration • Expenditure Accounting • E- Transactions/ Payments • ITSTS • GCT Registration & De-Registration • Classification • Audit • Audit Review • Assessment • Valuation • Business Process Re-engineering • Passenger/Baggage Processing • Refund Processing • Expenditure Accounting • Revenue Accounting • E-Transactions/ Payments Improve Information and Communication Technology Processes • ITSTS • Administrative Systems (including HRMIS, document Management, Procurement, Inventory) • Taxpayer Data Base- TRN System Business Process Re-engineering Business Intelligence System Directorate-wide Internal Electronic Communication • ITSTS • Waiver Information System • Business Process Re-engineering • ITSTS • ICT Policy • Tax Revenue • Tax Base • Computerized Integration of Core Systems (ICTAS) • Legal IS • Expenditure Accounting • Business Process Re-engineering • Intranet TASD ODG TAD ITSTS Internal Technical & Service Tracking System

17. Tax Administration Collect the Revenue Due EFFICIENCY (Cost of Collecting) EFFECTIVENESS (Equitable Collection Systems) • Issues Common to all Departments • HR Plan • Right-functioning/role clarification and Integration • Right sizing • Job rotation • Career development • Performance management • Quality review • Supervision • Strategic and annual plans • Integrated planning and control • Job evaluations and descriptions • Space Management Issues Common to all Departments Issues Common to all Departments Issues Common to all Departments Issues Common to all Departments Issues Common to all Departments Organization and Management Objective IRD TAAD • Core Activity Training • Orientation • Line Officer • Cashiering • Auditing • Cargo Processing • Passenger/Traveling Processing • Warehouse Operations and standards • Investigations • Foreign Languages CD • Core Activity Training • Orientation • Compliance Officer • Taxpayer Accounting • Taxpayer Service Collections • Cashiering • Revenue Accounting • Core Activity Training • Orientation • Audit • Assessment • Valuation • Tax Fraud Investigation • Returns Processing • Audit Services • Cashiering • Registration • Risk management Improve Organization and Management • HRM policy • HR plan (Tax Admin) • Staffing control • Code of Conduct • Operations oversight • Performance incentive scheme • Executive management development • HRM oversight • Career paths • Classification equity • Functional integration • Branding of Tax Admin • Space planning policy • Core Activity Training • Orientation (Tax Admin, TASD) • “Across Departments” • Supervisory • General Management • Training Systems • Training of Trainer • Taxpayer Registration • Core Activity Training • Orientation • Appeals Officer TASD ODG TAD

18. Identify critical areas of success and set targets For consistency track targets over a period of time

19. Developing the strategic direction within the Jamaican Tax Administration Key terms Road Map Strategic/Corporate Plan Operational Plan Performance management system

20. The reporting process – monthly and quarterly Structured format for data capture Template used throughout departments Written analysis of data accompany report Reports signed by respective Commissioners Quarterly stand-up reviews Evaluation of Tax Administration Performance

21. Weights are applied to outputs Need for more than 1 measure of performance Evaluation of Tax Administration Performance

22. Measuring Staff Performance

23. Some Criteria for an Effective Staff Appraisal System Staff performance must be aligned to the strategic objectives of the organization Must be timely and consistent Must be objective and transparent

24. Measuring staff performance within the Jamaican Tax Administration • Each operational plan has a measurable component • Individual plans have key results areas (KRA’s) which are aligned to unit plans • Additional indicators discussed within departments

25. Performance Appraisal System • Starts by identification of deliverables in departmental plans • Development of Section/Unit plans and then individual plans • KRA’s taken from individual workplans plans and form the base of the performance appraisal document

26. Performance Appraisal System • Performance target are discussed jointly with Supervisor and desired results identified. • Performance plan has five parts • KRA’s • Employee Performance Factors • Supervisory Performance Factors (where necessary) • Performance Consequences • Training and Development

27. Performance Appraisal System • 2 reviews done annually – interim 6 months and end of year • Overall score assigned • Standard set –at least 85% of staff obtain 70% or more on PER

28. Link with Organizational Performance • Template developed to align staff performance with that of the departments

30. Strengths of the System • Incremental improvements in organizational review process • Increased communication to staff members • Some aspects of data collection is done • Reliance on data from ICTAS (development of data warehouse)

31. Strengths of the System • Willingness to benchmarking to try to improve on adequacy of measures • Quality assurance mechanism embedded in process

32. Weaknesses of the system • Inconsistent and insufficient data collection • Inadequate feedback • Lack of in-depth analysis of trends to adequately inform the decision making process • Lack of soundness/adequacy of measures

33. Weaknesses of the system Insufficient Communication Timing – completion of strategic direction, completion of PER’s Insufficient documentation of reports Inconsistencies – No sanctions for department failure but sanctions for incompletion of PER’s