No one likes paying taxes. But everyone benefits when tax collection is efficient and fair. For almost all developing countries, building a more effective and trusted tax administration is critical. This not only helps finance much-needed social spending and infrastructure, but also reduces dependence on aid, now subject to its own pressures. It’s also a key pillar in building accountable, effective and respected government institutions.
Achieving this is partly down to good tax design. But it is also largely a matter of building strong tax administrations. This is not easy. A new instrument — the Tax Administration Diagnostic Assessment Tool, being developed at the International Monetary Fund with donor support and technical input from a wide range of experts — aims to help.
TADAT, welcomed in the communiqué of the First High-Level Meeting of the Global Partnership for Effective Development Cooperation, provides an independent, standardized, evidence-based, quality-assured, all-round assessment of the performance of a tax administration. All of these adjectives are critical, as will become clear. TADAT provides, in effect, a revenue-side analog to the highly successful Public Expenditure and Financial Accountability framework.