Literature on M&E in tax reform emphasises the need to look at the ‘soft’ elements of organisational culture (e.g. management philosophy, behaviours and style; degree of empowerment and ownership) as well as the ‘hard’, quantifiable indicators (e.g. changes in revenue levels) (Vázquez-Caro & Bird, 2011). Progress in tax reform has been judged by improvements in processes (clear reform objectives, reasonable expectations, evidence base, high-quality taxation advice, good donor-partner relations) (Murray et al., 2014), or changes in revenue agency performance (Kariuki, 2012a; 2012b). Tools used for M&E include literature reviews, (semi-) structured interviews and questionnaires, and other data collection and analysis (Murray, Oliver, & Wyatt, 2014; Kariuki, 2012a; 2012b). Performance indicators have been chosen in collaboration with stakeholders so that they are in line with tax agency priorities and likely to be implemented (Kariuki, 2012a; 2012b). The likelihood of implementation can be affected by practical issues (e.g. data availability, processing capacity) as well as political economy issues.
Two new tools have been designed recently specifically for M&E of tax reform and tax systems. The World Bank’s Integrated Assessment Model for Tax Administration (IAMTAX) is a web-based tool to identify and assess tax administration performance over time (World Bank, 2011). Performance is assessed by analysing the legal and regulatory framework, the institutional set-up, and core business processes. The IMF’s Tax Administration Diagnostic Assessment Tool (TADAT) is designed to identify administrative strengths and weaknesses, to construct a shared assessment among all stakeholders, to set the reform agenda, to facilitate the management and coordination of external support for reforms, and to provide a basis for monitoring and evaluating progress (IMF, 2013). It has nine performance outcome areas with corresponding indicators. TADAT was modelled on the Public Expenditure and Financial Accountability (PEFA) framework and is designed to be the revenue counterpart to PEFA’s public financial management assessments. As both of these are relatively new tools (TADAT will launch the final version of the assessment tool in mid-2015), there is as yet a lack of literature which critiques them and their indicators.
Other sources of indicators to monitor tax systems in developing countries include the OECD Tax Administration (formerly the Comparative Information Series), the PEFA Framework, the European Commission’s Fiscal Blueprints, USAID’s Collecting Taxes Database, and the World Bank’s Diagnostic Framework for Revenue Administration.
Relevant Value-for-money (VFM) literature is focused on governance programming generally, rather than specifically on tax reform. Key recommendations include: noting that VFM can be measured without quantification of all variables; thinking early about VFM during programming; breaking down the Theory of Change and Results Chain into constituent parts (inputs, outputs, outcomes, impacts and assumptions) and considering all parts in VFM analysis; and not treating VFM analysis as separate from project design (DFID, 2011; 2013).
- The TADAT performance outcome areas are (1) integrity of the registered taxpayer base (i.e. information about the taxpayers); (2) extent of understanding about the compliance risks in the tax system; (3) quality of support provided to taxpayers to promote voluntary compliance; (4) extent to which taxpayers meet their filing obligations; (5) extent to which taxpayers meet their payment obligations; (6) accuracy with which taxpayers declare their tax obligations; (7) adequacy of tax dispute resolution; (8) efficiency of tax administration; and (9) level of accountability and transparency to the government and the public.
- As noted in IMF. (2014, March 5). New Tool to Improve Tax Administration. IMF Survey Magazine: In the News. IMF.
- Oxford Policy Management. (2006). Developing capacity? An evaluation of DFID-funded technical cooperation for economic management in sub-Saharan Africa: Synthesis report (DFID Synthesis Report EV 667). London: Department for International Development (DFID). See document online
- DFID. (2011). Briefing note: Indicators and VFM in governance programming. London: Department for International Development (DFID). See document online
- Kariuki, E. (2012a). Performance measurement in African semi-autonomous revenue authorities : The case of Kenya, South Africa and Tanzania. How can performance measures in African semi-autonomous revenue authorities (ARAs) be strategic, efficient and effective? (Doctoral Thesis, University of Bradford). See document online
- Kariuki, E. (2012b). Corporate level performance measurement in tax administrations in emerging economies: Towards convergence? (Publication No.2). Nairobi: Africa Policy Research Institute Limited (APRIL). See document online
- Murray, K., Oliver, R., & Wyatt, S. (2014). Evaluation of taxation reform in the Pacific. Aukland: Sapere Research Group. See document online
- Vázquez-Caro, J., & Bird, R. (2011). Benchmarking tax administrations in developing countries: A systemic approach (International Studies Program Working Paper 11-04). Atlanta: Georgia State University. See document online