One-stop shops

Bolstering Revenue, Building Fairness: Uganda Extends its Tax Reach, 2014 – 2018

Author
Leon Schreiber
Country of Reform
Abstract

After a decade of reforms to boost tax collection, in 2014 the Uganda Revenue Authority (URA) faced up to one of its biggest remaining challenges. Although the agency had significantly improved its internal capacity—along with its ability to collect taxes from registered taxpayers—large numbers of Ugandans paid nothing because they were unregistered or because inadequate compliance monitoring enabled them to underpay. The holes in the system undermined public trust and bedeviled the URA’s efforts to meet the government-mandated target to raise tax revenue to 16% of gross domestic product. The URA then joined other government agencies to bring millions of unregistered citizens into the tax net, and it tightened the oversight of existing taxpayers who were paying less than their fair share. Prime targets were millions of Ugandans who worked in the informal economy, which the government said accounted for nearly half of the country’s economic activity. At the same time, the URA set up operations to go after wealthy and politically connected individuals who avoided paying their full tax load, and it created a separate unit to press government departments that failed to remit to the URA the taxes they collected, such as withholdings from employees. The URA’s program achieved strong gains on all three fronts and thereby helped increase the country’s tax-to-GDP ratio to 14.2% in the 2017–18 fiscal year from 11.3% in 2013–14. Just as important, the program made significant progress toward a fairer distribution of the tax burden for Ugandans across all economic levels.

Leon Schreiber drafted this case study based on interviews conducted in Kampala, Uganda, in January and February 2019. Case published April 2019.

To view a short version of the case, please click here 

See related Uganda Revenue Case Study: Righting the Ship: Uganda Overhauls its Tax Agency, 2004-2014

 

Righting the Ship: Uganda Overhauls its Tax Agency, 2004 – 2014

Author
Leon Schreiber
Country of Reform
Abstract

In the early 2000s, the Uganda Revenue Authority (URA) faced a crisis. Even after adopting a modernized legal framework that made the agency semiautonomous—able to operate much as a business would, though still accountable to a public board—the institution remained paralyzed by corruption, outdated technologies and procedures, and a toxic organizational culture. In 2004, to begin righting the ship, the URA’s board appointed 43-year-old Allen Kagina, who had served the agency for more than a decade, as the new commissioner general. Kagina engineered a radical overhaul that required all 2,000 URA staff members to reapply for new positions under a revamped organizational structure. A new modernization office overhauled tax procedures, upgraded the URA’s technology, improved anticorruption measures, strengthened the tax investigation and prosecution function, and enhanced staff capacity. At the same time, the URA was working to smooth its customs procedures and improve cooperation with partner countries in the East African Community. 

Leon Schreiber drafted this case study based on interviews conducted in Kampala, Uganda, in January and February 2019. Case published April 2019.

To view a short version of the case, please click here

See related Uganda Revenue Authority Case Study: Bolstering Revenue, Building Fairness: Uganda Extends its Tax Reach, 2014-2018

Funding Development: Ethiopia Tries to Strengthen its Tax System, 2007-2018

Author
Leon Schreiber
Country of Reform
Abstract

In its 2006 national vision to end poverty, Ethiopia set its sights on becoming a middle-income country by 2025. It was a hugely ambitious goal for a country that, at the time, was one of the poorest in the world. To support development objectives put on hold during a decade of political turbulence, including a costly border war with Eritrea that drained public coffers, the Ethiopian government sought to expand its resources by significantly boosting tax revenues. The new plan called for a sharp increase in the ratio of tax revenue to the size of the economy—and within four years. The government merged its separate customs and domestic tax offices into a single entity and restructured the new agency’s operations along functional lines, increased salaries, adopted stringent anticorruption rules, implemented a modern information technology system, and launched public awareness campaigns. It was important that the new revenue authority worked to improve its coordination with the tax offices of subnational governments, which operated with substantial independence under the country’s federal system. Although unproven charges of corruption against the Ethiopian Revenues and Customs Authority’s long-serving director general in 2013 stalled progress, a new round of IT and legal reforms in 2016 helped increase tax collection significantly: to US$7.8 billion in 2017 from US$1.3 billion in 2006 (measured in constant 2010 US dollars). Nonetheless, revenue gains continued to lag behind economic growth. In 2018, under a new prime minister, the government began to take further steps to strengthen tax collection.

Leon Schreiber drafted this case study based on interviews conducted in Addis Ababa, Ethiopia, in October 2018. Case published December 2018.

To view a short version of the case, please click here

 

Keeping up with Growth: Building a Modern Tax Administration in Vietnam, 2004-2015

Author
Leon Schreiber
Focus Area(s)
Country of Reform
Abstract

As Vietnam gradually became a middle-income country during the early 2000s, its tax agency struggled to keep up. In the decade and a half following the Communist Party–led government’s 1986 decision to establish a market-based economy, local entrepreneurs launched businesses, foreign investors poured into the country, and the average annual rate of economic growth soared to 7.5%. But during the same period, tax revenues declined as the General Department of Taxation (GDT), which previously collected almost all of the country’s taxes from a small group of state-owned enterprises, strove to keep pace with the economic dynamism. In 2004, the department established an internal reform team and adopted a strategy to make sure those who could pay covered their fair share of the cost of government services. The GDT worked with the finance ministry’s tax policy department and the parliament to implement a raft of legal changes. The department then reorganized each of its 758 tax offices along functional lines, rolled out a new IT system, improved staff training, and created a unit to bolster taxpayer compliance. It later adopted a personal income tax and tried—sometimes unsuccessfully—to close exemptions created earlier to attract foreign investors. Although its collection levels began to plateau after 2010, in the decade or so from 2004 to 2015 the GDT increased the number of registered taxpayers in the country to 15 million from 2 million and tripled the amount of taxes it collected annually, maintaining one of the highest tax-to-GDP ratios in East Asia.

Leon Schreiber drafted this case study on the basis of interviews conducted in Hanoi, Vietnam in May 2018. Case published in August 2018. 

To view a short version of the case, please ckick here

The Foundation for Reconstruction: Building the Rwanda Revenue Authority, 2001-2017

Author
Leon Schreiber
Focus Area(s)
Country of Reform
Abstract

After the 1994 genocide that claimed hundreds of thousands of lives, Rwanda’s tax collection collapsed to $132 million in 1996 from $225 million in 1990. Aside from its desperate need for money to pay for reconstruction, the new unity government, led by Paul Kagame’s Rwandan Patriotic Front, was also determined to break its dependence on foreign donors by becoming entirely self-funding. To do that, Kagame’s government had to convince a traumatized and distrustful public to pay its fair share of taxes. In 1998, the government replaced the existing tax and customs departments with the Rwanda Revenue Authority (RRA), a semiautonomous tax agency. The RRA overhauled tax collection procedures, increased staff capacity, improved information management, and launched a massive and sustained public education campaign in an effort to build a new social contract. As a result, in 2017 Rwanda collected in three weeks the same amount of tax it had collected annually a dozen years earlier. From 1998 to 2017, Rwanda’s tax-to-GDP ratio improved from 10.8% to 16.7%, and total tax revenues collected grew more than 10-fold to $1.3 billion. Moreover, from 2007 to 2017 alone, the number of registered taxpayers grew 13-fold—from 26,526 to 355,128—though Rwanda was one of the world’s poorest countries and most of its labor force of 6.3 million still had incomes below the threshold that made them tax eligible. By 2017, the government financed 62% of its annual budget from domestic tax revenues, up from just 39% in 2000. The country was on its way to ending donor dependence.

Leon Schreiber drafted this case study based on interviews conducted in Kigali, Rwanda in March 2018. Case published May 2018.

To view a short version of the case, please click here

Broadening the Base: Improving Tax Administration in Indonesia, 2006-2016

Author
Leon Schreiber
Focus Area(s)
Country of Reform
Abstract

In the mid 2000s, Indonesia’s Directorate General of Taxes (DGT) was still struggling to recover from the shock of the Asian financial crisis of the previous decade. Tax revenue had plummeted during the crisis, and the collection rate remained well below accepted standards, as well as below the standards of many peers in the region. In 2006, the directorate’s new leaders launched a nationwide overhaul, drawing lessons from a successful pilot program that had reorganized the DGT’s biggest offices and enabled large taxpayers to settle all of their tax-related affairs with a single visit to one office rather than having to go through multiple steps. Expanding that pilot to more than 300 locations across a 3,000-mile archipelago presented no small challenge. The implementers built a digital database that linked all offices to a central server in the capital of Jakarta, developed competency testing and training that bolstered the quality of staff, and created new positions to improve relationships with taxpayers. Other measures aimed to reduce corruption and tax fraud. When political and practical crosswinds frustrated the DGT’s efforts to build the workforce its leaders thought it needed, the agency turned to big-data analytics to improve compliance and broaden the tax base. By 2018, domestic revenue mobilization had plateaued, but the changes introduced had produced important improvements. The question was then what to do to broaden the base further without decreasing incentives for investment or raising administrative costs to unsustainable levels.

Leon Schreiber drafted this case study based on interviews conducted in Jakarta in January and February 2018. Case published April 2018.

To view a short version of the case, please click here

 

Securing Land Rights: Making Land Titling Work in Rwanda, 2012-2017

Author
Leon Schreiber
Focus Area(s)
Country of Reform
Abstract

In June 2012, Rwanda’s national land registry completed a nearly four-year project that mapped every one of the country’s 10.4 million parcels and prepared title documents for 8 million landholders. It was an unprecedented accomplishment in a country in which lack of land titling had weighed on the economy and led to escalating conflict over access to land. The mapping program promised to reduce tensions by establishing an orderly system for registering and transferring landownership. However, the system could work only if Rwandans registered every transaction, and in 2012, a survey found that only about one of every eight landowners had even bothered to pick up their official titles. The registry urgently had to both make it easier to register transactions and build public awareness about the importance of keeping the land database up-to-date. A registry team launched a nationwide campaign to raise awareness about the importance of titling and of reporting all land transactions. Managers simplified procedures and registration forms. And to provide greater access in rural areas, where titling was nearly unknown, the registry decentralized services and introduced a new software platform to speed transactions. By mid 2017, more than 7 million people had collected their titles, and registrations of sales, purchases, and other kinds of transfers had begun to improve. Still, the number of transactions reported in 2016 fell short of the registry’s target, indicating that further work lay ahead.

Leon Schreiber drafted this case study based on interviews conducted in Kigali, Musanze, and Huye, Rwanda, in June and July 2017. Fortunee Bayisenge, Lecturer and Dean of the Faculty of Development Studies at the Protestant Institute of Arts and Social Sciences, collaborated on the research. The British Academy-Department for International Development AntiCorruption Evidence (ACE) Program funded the development of this case study. Case published September 2017.

Faster Together: A One-Stop Shop for Business Registration in Senegal, 2006–2015

Author
Maya Gainer, Stefanie Chan, and Laura Skoet
Country of Reform
Abstract

In 2007, Senegal opened a Business Creation Support Office that vastly reduced the time required to register a business from two months to 48 hours. Before the creation of the office, foreign investors as well as local entrepreneurs had to deal with six different government agencies, each of which had its own requirements and procedures. The onerous undertaking discouraged business investment, kept significant revenue sources off government tax rolls, and created fertile ground for corruption. In 2006, President Abdoulaye Wade decided to change the situation. Wade assigned the Agency for Investment Promotion and Major Works, or APIX, the task of making it possible to register a business in just two days. A small team from the agency examined the options and decided that a one-stop shop would best meet Senegal’s needs. The model required no legislative changes, and it allowed agencies to retain control over their procedures—while reducing red tape and letting APIX supervise the entire process. APIX leaders worked hard to win the cooperation of institutions and individual agents, and the Business Creation Support Office opened in downtown Dakar in November 2007. The institutions involved in registration sent representatives to work in the office, and APIX staff collected applications, supervised the office, and coordinated gradual improvements in procedures. After the office opened, entrepreneurs could complete the registration process at a single location and be done within 48 hours. By 2016, the office had further reduced the time required to a single day.

Maya Gainer, ISS Research Specialist, and Stefanie Chan and Laura Skoet of Sciences Po’s Paris School of International Affairs drafted this case study based on interviews conducted in Dakar, Senegal, and Abidjan, Côte d’Ivoire, in January 2016. This case study was funded by the French Development Agency. Case published ­­­­­­­­­­­­­­­May 2016.

Artan Hoxha

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D
Focus Area(s)
Ref Batch Number
5
Country of Reform
Interviewers
Jona Repishti
Name
Artan Hoxha
Interviewee's Position
President
Interviewee's Organization
Institute for Contemporary Studies
Language
Albanian
Nationality of Interviewee
Albanian
Town/City
Tirana
Country
Date of Interview
Reform Profile
No
Abstract

Artan Hoxha speaks about government reform movements in Albania.   He opens his discussion with the reforms that took place in Albania from 1992-1996. These focused on opening markets and pushing privatization movements. Hoxha cites the drive towards reform from within Albania as a factor in their success. He then speaks about later reforms including de-politicization efforts within the military, police, and the public administration. He continues his discussion by speaking about the importance of good human resources and training in reforming the public sector. He cites competitive recruitment, proper training, and comprehensive performance evaluation as essential to an effective government. He concludes his discussion by touching on the importance of transparency and modern technology in the public service sector.

Profile

At the time of the interview, Artan Hoxha was the president of the Institute for Contemporary Studies, an Albanian think-tank. He served previously as the Minister of Trade and Foreign Economic Cooperation in the Albanian government.   There he oversaw public sector reforms including the restructuring of ministries, downsizing of the public administration, and decentralization of services. His work with the Intsitute of Contemporary Studies has been focused on similar reform practices.   

Full Audio Title
Audio Available Upon Request

David Adom

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P
Focus Area(s)
Ref Batch Number
1
Critical Tasks
Country of Reform
Interviewers
David Hausman
Name
David Adom
Interviewee's Position
Consultant
Interviewee's Organization
AA&K Consulting
Language
English
Town/City
Accra
Country
Date of Interview
Reform Profile
No
Abstract

Former IRS Commissioner David Adom describes the organizational changes that helped improve revenue collection at the Ghanaian IRS between 1986 and 2001.  He focuses on changes to human resource policy and organizational structure.  On his watch, first as deputy Commissioner and then as Commissioner, the IRS became autonomous from Ghana’s civil service regulations.  Using that freedom, the organization tripled salaries and hired a large new cohort of professionals—mostly lawyers and accountants.  In order to integrate these new hires into the pool of existing employees, Adom kept retrenchments to a minimum, applied salary raises equitably throughout the whole organization, and spread new hires across different units in order to give new and old staff a chance to mix on the job.  Finally, in an attempt to target the small number of taxpayers who accounted for more than half of Ghana’s revenue, Adom introduced an elite Large Taxpayer’s Office, which offered better service—and more careful enforcement—to wealthy individuals and firms.  

Case Study:  Professionalization, Decentralization and a One-Stop Shop: Tax-Collection Reform in Ghana, 1986-2008

Profile

At the time of this interview, David Adom was a consultant at AA&K Consulting.  He was deputy commissioner for research and planning in the Ghana Internal Revenue Service between 1986 and 1996, and he went on to serve as commissioner of the organization from 1996 until 2001.  Before he joined the IRS, he worked as a chartered accountant in Nigeria. 

Full Audio File Size
63 MB
Full Audio Title
David Adom Interview