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Tax policy effectiveness, transparency and administration

Increasing domestic resource mobilization will require changes to both tax policies and tax administration. The Addis Ababa Action Agenda includes concrete commitments and action items in this respect.

Specifically, Countries commit to:

  • Enhance revenue administration through modernized, progressive tax systems, improved tax policy and more efficient tax collection
  • Work to improve the fairness, transparency, efficiency and effectiveness of our tax systems, including by broadening the tax base and continuing efforts to integrate the informal sector into the formal economy in line with country circumstances
  • Recognize that price and tax measures on tobacco can be an effective and important means to reduce tobacco consumption and health-care costs, and represent a revenue stream for financing for development in many countries
Latest developments

Strengthened tax administration is an important component of medium-term planning. Tax administration suffers from lower capacity in LDCs and some middle-income countries. Low-income countries have approximately one tenth of the staffing of high-income countries. In all income groups, population per tax administration employee increased between 2016 and 2017, suggesting either decreasing capacity of tax administration or an increase in productivity of staff, perhaps through adoption of technology.

Median population per full-time tax administration employee, by income group, 2016–2017

(Number of population)

The percentage of female staff and executives in tax administration increases with higher country-income levels. More equitable representation of women among staff at tax administrations and in finance ministries, which often make tax policy, can assist in ensuring that the gender impacts of fiscal policies are more effectively included in decision-making.

Source: IMF, International Survey on Revenue Administration.

Average percentage of female staff and executives in tax administration, by income group, 2016–2017

(Percentage of staff)

Source: IMF, International Survey on Revenue Administration.

There are tools available that can help countries as they prepare revenue strategies. For example, the Tax Administration Diagnostic Assessment Tool (TADAT) is an assessment framework used to measure key components of a tax administration. As at end-January 2020, 92 TADAT assessments have been conducted. The framework is being used (both formally and informally) to guide high-level decisions on tax administration reform efforts. Additionally, some customs administrations are using relevant elements of the TADAT framework—such as risk management, voluntary compliance and revenue accounting—to monitor performance and implement remedial measures.

Read more on the latest developments by the Task Force here.