Effective Revenue
Collection Strategies

Introduction

• • Introduction to revenue collection
  • Need to maximize tax revenue
  • OECD Guidelines
  • Fiscal Policy
  • Revenue collection in relation to GDP
  • Ratio of GDP to tax – some statistics
  • Develop/ developing countries
  • Confidence in Government
  • Government Spending

 Types of Revenue

• • Income Tax
  • Corporate Tax
  • VAT / Sales Tax
  • Custom Duty
  • Excise Duty
  • Others

Increasing the Tax Base

• • Mandatory Registration for VAT/ Sales Tax
  • Encouragement of Self-Assessment
  • Fair & efficient refund system
  • Effective communication with taxpayers
  • Simplify Taxation system

Performance challenges in local Taxation

challenges faced by (local) governments in establishing a functioning property tax process

• • Absence of property registration and an updated valuation of properties.
  • Inability to access information about property valuations due to the high cost of these services.
  • No reliable databases (e.g., absence of street names or property addresses) to make billing and collection efficient.
  • Handwritten bills, which is time consuming and can result in revenue leakages.
  • Uneven leadership commitment and political interference that hinder revenue mobilisation and collection.
  • Local government employees receive no training programmes pertaining to data collection, bill delivery, debt management, communications and social skills.

How to Increase revenues from local taxes? unlocking tax-revenue collection in rapidly growing markets

The quick-win approach is designed not only to make tax administrations more effective and to address their most pressing needs but also to provide a powerful “proof of concept” for broader efforts.

• • Focus resources on improved auditing, processes, and tools
  • Use simple segmentation to identify larger collection opportunities
  • Target collections in the tax offices with the largest outstanding debts
  • Ensure regular updates to the taxpayer registry
  • Introduce account managers to oversee large taxpayers
  • Use electronic channels for simple transactions
  • Communicate the benefits of the quick wins widely
  • Analyze opportunities to close tax loopholes
  • Simplify the tax system to encourage formalization
  • Create external checks that enforce compliance

Four broad success factors that help tax-administration reform programs achieve the desired level of impact. While these factors are important in all such programs, they are especially critical in rapidly growing markets, where implementation is particularly challenging.

• • First, the program must be coordinated across all the relevant government functions, including communications, human resources, IT, and legislation.
  • Second, governments must secure a sufficient long-term commitment of financial and organizational resources at the outset.
  • Third, the program must deliver some early successes, as these will provide legitimacy and finance longer-term initiatives.
  • Finally, a technical team focusing solely on this work (and operating separately from any political structure) should collaborate closely with the tax-administration staff responsible for day-to-day business.
    • The team must design and implement the initiatives, establish clear metrics, and closely monitor the results.

Other Indirect Methods

• • Linking Tax Payments with other transactions
  • Use of Internet/ Mobile
  • Matching Sales Tax with Sales/ Purchases
  • Introduction of Turnover / Fixed Taxation

Budget

• • Budget Formulation
  • Stakeholders in budget exercise
  • Budget implementation

 Role of Tax Authority

• • Reforms in Taxation system
  • Minimize Exemptions
  • Large Taxpayer unit
  • Introduction of Advance Tax
  • Closing loopholes
  • Minimize corruption
  • Efficient M.I.S. System
  • Performance Analysis
  • Accurate / Timely Information

Governance in Tax Departments

• • Improved Governance
  • Composition of Efficient Board of Directors/ Governance
  • Inducting Independent Directors / Professionals
  • Consequences of bad governance

 Importance of Internal checks

• • Necessity of Internal controls
  • Effective Internal Checks
  • Efficient Audit system
  • Role of Internal Auditor