Integral Tax Collection Index as a New Approach to Assessing Tax Administration

Abstract

Budget mobilization and improvements in the quality of tax administration are always among the top priorities for fiscal authorities. During periods of instability the role of tax compliance and budget execution increases even more. Times like these require quick analysis and adaptation of the tax system to changing economic conditions, and do not always allow conventional scientific approaches to be used in the analysis of tax collection. Fiscal authorities are faced with the need to create relatively simple tools for assessing that would allow one to analyze revenues with a minimum set of data and to assess the efficiency of the tax authorities taking into account changes in the macroeconomic environment. The integral index of collection presented in this work can help solve this problem. The essence of the approach is to analyze the coherence of two dynamics: actual tax receipts and their proxy tax base. The methodical advantages of the proposed indicator are its relative simplicity and versatility. It is applicable for most of the tax and non-tax payments and can be used both independently and in conjunction with other indicators of tax collection completeness. The above makes the index a convenient tool for quick analysis at different stages of the budget process—it can be useful not only for ex-post understanding of trends in budget revenues execution and tax administration dynamics, but also for improving the accuracy of budget forecasts ex-ante.

Keywords

• taxes
• budget
• tax collection
• tax administration