Any lessons on why and how some countries have been able to address corruption in the tax administration?

This is hard to respond to, but there are some cases and some inklings. Perhaps one of the most successful cases is that of the Georgia, where after the overthrow of a sclerotic, corrupt, long-entrenched regime, the country implemented revolutionary change throughout, including cleaning up its tax administration.

Crooked tax officials were either tossed or prosecuted. Most tax officials were fired and replaced with new professionals. Systems of internal control in the tax administration were strengthened.

In El Salvador, in the 1990s, just after the end of the long civil war, the tax administration and other parts of government took pains to root out corruption.

Similarly, in Rwanda, after their terrible genocide of the early 1990s, top to bottom reform of most public institutions included deep anti-corruption measures.

This is how the tax systems in both these countries were able to produce more and more revenue without raising tax rates.

I don’t want to say a country needs to have a revolution to address its corruption problems, but in these cases, it seems to have set the stage for broad reforms.

That said, from my experience of 30 years, all real efforts to fix the tax system also include efforts to impede corruption.

Is it necessarily politically harmful for an elected government to attempt to broaden the tax base?

No, but it is not easy. Strengthening taxpayer registration can be done without any real political push back, but it is not likely to have great financial return, though in Bosnia and Herzegovina it did.

Reducing tax incentives is very difficult politically. Usually the people who benefit from these so-called incentives are very well placed and wield considerable power.

Going after these tax incentives is very important and needs to be done. But it needs to be done very carefully, with full consideration of who loses, how much, and what will be the force of their opposition and how can this be overcome.

Is there a significant role for information technology here?

Yes, but this depends upon the country. The more backward the country, the less scope there is.

On the other hand, IT systems, and especially linking the taxpayer registry to other information sources, such as vehicle registration, air traveller information, real estate or property registration and transfer systems, can help a savvy tax administration identify people who are likely under-reporting income as well as identify people and activities that should clearly be in the tax system but are not.

I explore this a bit in my article Big Data and Domestic Resource Mobilization: How Donors Can Help Developing Countries Increase Revenue.

How would you summarise your views on success stories in broadening the tax base?

Broadening the tax base is the best way to reform a tax system and to increase domestic revenue mobilisation, which is needed to fund our governments and to invest in the future.

Base broadening allows us to raise more revenue without raising tax rates and without harming the economy and national competitiveness.

Broadening the tax base increases the fairness of the tax system, since it shares the tax burden with more people in the economy. It reduces the distortions caused by tax and investment policy that seek to favour one investment or industry over another.

It's something righteous, but tough. The most powerful interests in any economy tend to be those who benefit from tax incentives and they are not going to release their grip from the throat of the political system easily.

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