How we can benefit from better tax administrations

No one likes paying taxes. But everyone benefits when collection of those taxes is efficient and fair. For almost all developing countries, building more effective and trusted tax administrations is critical. This helps finance much needed social spending, infrastructure, and reduce 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 being developed at the International Monetary Fund with donor support and technical input from a wide range of experts — the Tax Administration Diagnostic Assessment Tool (TADAT) — aims to help.

The tool — which is welcomed in the Communiqué of the First High-Level Meeting of the Global Partnership for Effective Development Co-operation — provides an independent, standardised, 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 analogue to the highly successful Public Expenditure and Financial Accountability (PEFA) framework.

The technical design of TADAT will be completed in the next few months. The tool itself will be posted on the TADAT website for public comment in a few weeks. It has already been piloted in three countries – in Zambia, a low-income economy; high-income Norway; and the emerging economy of South Africa. Countries differ greatly in circumstances, culture and organisational/legal structures, and it is important that the tool be robust enough for use under a wide range of circumstances.

With several more pilots planned, results have been uniformly encouraging so far. All three pilot countries have found the tool extremely helpful. One striking regularity is that administrations often found that they were not performing as impressively in some areas as they had thought — but that they were also not doing as badly in others as they had feared. This is exactly the value of an independent, standardized assessment.

TADAT works by evaluating a tax administration in each of nine ‘Performance Outcome Areas’ (POAs), shown in the TADAT ‘wheel.’ This starts with taxpayer registration — making sure all are in the tax net who should be, and that records are up to date – and goes all the way to looking at how tax disputes are handled and whether the tax administration is working transparently. A score is given for each area, with 27 ‘indicators’ forming part of 54 detailed ‘dimensions.’

This is all much simpler than it may sound. Take, for instance, POA 5: Payment of Obligations. Clearly any tax administration wants to make sure that taxpayers pay on time and in full – so one of the two indicators here is timeliness of payments. We can assess this by looking at such things as whether VAT payments are made on time, recording an ‘A’ if the proportion is above 90 percent to ‘D’ if it is below 50 percent.

This exercise doesn’t aim to reach some overall score or country ranking. Nor does it come up with immediate recommendations or advice. This is diagnosis, not prescription.

The idea, rather, is to help countries themselves to identify their own tax administrations’ relative strengths and weaknesses, and develop reform strategies accordingly. TADAT’s standardization and rigid insistence on firm evidence for all assessments will make a major contribution to more effective development co-operation, helping donors and other stakeholders identify and agree on the areas where support is most needed, coordinate their efforts and debate the issues in an agreed framework.

And with repeat assessments, TADAT will give a systematic and structured view of progress being made.

Importantly, TADAT is not only for developing countries. Tax administrations in all countries face the same basic challenges, and indeed the years since the 2008 financial crisis have exposed weaknesses in many tax administrations in advanced economies, and lent renewed urgency to fair and effective tax collection in many more. At the same time, many have been asked to do more with fewer resources. For them too, a hard-nosed and independent assessment of their strengths and weaknesses can provide an invaluable perspective in deciding their own priorities for improvement.

Its implementation is being overseen by a Steering Committee of enthusiastic donors – the European Union, Germany, Japan, Netherlands, Norway, Switzerland, and United Kingdom along with the IMF, World Bank and South African Revenue Service. A technical advisory group provides, well, technical advice. Day-to-day operations are overseen by a small secretariat within, but at arm’s length from, the IMF.

This secretariat will be responsible for developing the tool, and — crucially — for assuring the quality of TADAT assessments.

These assessments will be undertaken by a wide range of organisations: regional development banks, international organisations, consultancy firms and others. A key element of the TADAT philosophy is that assessments should be undertaken only by tax administration experts specifically and extensively trained to do so. Over the next few months, a core goal is to build up a highly professional pool of accredited assessors to undertake the substantial work ahead and ensure that the unique and exciting potential of TADAT is fully realised.

KeenBioMichael Keen is Deputy Director in the Fiscal Affairs Department at the IMF, and Acting Head of the TADAT secretariat. For more information on TADAT, see or contact

Local priorities to achieve effective development

I think that it is crucial to take local priorities as the starting point for development co-operation.

Let me give you a very concrete example of why this is important. As mayor of Bagangté Municipality in Cameroon, I developed a project to provide drinking water to my citizens. With support from the International Association of Francophone Mayors, we built a well and held a large campaign to explain the need for citizens to pay taxes to ensure long-term sustainability of the drinking water system.

This was working well, and access to water was increasing. Then all of a sudden, our central government decided to launch a project in my region to provide free drinking water to citizens. This would cancel out all our efforts! I therefore told the government that we already had a programme to provide my people with water access and that this new project was unnecessary and potentially unsustainable in the long term. I am convinced that charging citizens for a service makes them take better care of the network, and ensures long term sustainability, as maintenance will be easier when people feel that the service belongs to them because they pay for it. I explained that if the central government wanted to invest in my community, their support for access to electricity would be far more useful. This example is a typical one.

Unfortunately, the Ministry refused to change or transform their project to improve the existing network.

Secretary-General Ban Ki-moon visited MDG Project in Mbalmayo. He was shown a water purification process and visited a radio station


In too many countries, local priorities are not taken into account, or not sufficiently known.

As a Champion on Development Co-operation for the global organisation of United Cities and Local Governments, a function shared with eight other mayors from around the world, I aim to increase recognition of local governments’ role in development. I see it as my task to feed lessons from my local reality into international discussions on making development co-operation more effective, coherent and accountable.

Local governments are on the front line of dealing with development challenges, and identifying solutions to them. It is only natural that they take a leading role in the elaboration of development strategies for their areas. A formal consultation mechanism should ensure that these are included in national development strategies. What’s more, local governments and their associations should be supported to have the capacity to engage in this dialogue.

Local government development co-operation as effective solution

Let me get back to my example from Cameroon. Our well project was supported by an association of local governments from abroad, with help from experts from other local governments that knew the kind of services we deliver and how to do this effectively. This helped to make the project a success. This “decentralised development co-operation” had a high degree of ownership and local traction, based on my local government’s priorities.

This kind of co-operation between peers is based on long-term relationships, resulting in trust, transparency and good dialogue between partners. This is very important to achieve sustainability. It can be done in a very cost-effective manner since the co-operation initiatives build on the existing local governments themselves and use existing staff within the municipal organisations. This avoids the need to set up parallel structures that could lack the political leadership of the partner itself.

The cost of not working with local governments

Strengthening local governments is crucial to achieve development goals. A top down approach by central government can result in development policies ill-adapted to local needs and contexts. Development partners such as multilateral organisations, states, and civil society should understand that the cost of not working with local governments may be high, missing local ownership, as seen in the case of the water project in Bagangté.

For a start, their action might not be sustainable when not embedded into a local public policy designed to meet the needs of the citizen. Embedding development priorities in local public policy ensures their continuation and follow up because municipal policy is attached to a concrete workplan with a budget. This bottom up process is very important.

There may also be duplication of work at local and national levels, with a risk of confusion on the mandates of different levels of government. Bypassing local government may also generate distrust among citizens.

I believe that local government development co-operation initiatives can provide national governments with a broad range of experiences to help them respond to issues, challenges or disasters that have effects at the local level. It is crucial that local governments become true partners in national dialogues on development priorities, policies and strategies.

It is also important that reviews of development co-operation commitments such as the Busan commitments give more attention to the role of local governments in national debates on development priorities and implementation. It is good that UCLG is back on the Global Partnership for Effective Development Co-operation’s Steering Committee.

I think UCLG should also explore, within the Global Partnership, how the post-2015 development goals will be implemented. It is in this regard important that more focus is placed on who can help achieve which goals, as opposed to just focusing on what should be achieved.

I hope that together we can ensure that the level of government closest to citizens, becomes more equipped to address the upcoming new set of development goals, which should be in line with our own priorities at the local level.

CourtesBioCélestine Ketcha Epse Courtés is mayor of Bagangté Municipality, Cameroon and Champion on Development Co-operation for the global organisation of United Cities and Local Governments (UCLG). The UCLG Champions are supported by the UCLG Capacity and Institution Building Working Group, which has its secretariat within the International Co-operation Agency of the Association of Netherlands Municipalities (VNG International). For more information contact

Partnership for Climate Finance and Development Holds Discussion on Africa

The Partnership for Climate Finance and Development led a discussion on challenges to accessing, managing and using climate finance in Africa, and the possibility of launching a country-led regional climate finance dialogue. The session took place during the meeting of the Africa Platform of the Low Emission Development Strategies Global Partnership (26 August 2014, Addis Ababa, Ethiopia). Further information available here.