Innovations in Tax Compliance : Building Trust, Navigating Politics, and Tailoring Reform

Recent decades have witnessed important progress in strengthening tax systems in developing countries. Yet many areas of reform have remained stubbornly resistant to major improvements; overall revenue collection still falls short of what is needed to support effective governance and service delivery, while tax collection is too often characterized by high rates of evasion among large corporations and the rich and disproportionate, though often hidden, burdens on lower-income groups. As countries around the world deal with large COVID-19-induced debt burdens, a focus on strengthening tax systems is especially timely. Innovations in Tax Compliance draws on recent research and experience to present a new conceptual framework to guide more effective approaches to reform. Building on the achievements of recent decades, it argues for an expanded focus on the overlapping goals of building trust, navigating political resistance, and tailoring reform to unique local contexts through a focus on identifying the most binding constraints on reform. This focus, it argues, can lead not only to greater compliance, increased fairness, and higher revenues, but can also contribute to the building of state capacity, sustained political support for further reforms, and stronger fiscal contracts between citizens and governments. Recent decades have seen important progress in strengthening country tax systems. Yet many areas of reform have remained stubbornly resistant to major improvements. Overall, revenue collection still falls short of that needed for effective governance and service delivery. Tax collection is too often riddled with high rates of evasion among large corporations and the rich and by disproportionate, though often hidden, burdens on lower-income groups. As countries around the world deal with the large debt burdens induced by COVID-19, an in-depth look at how to strengthen tax systems is especially timely. Innovations in Tax Compliance: Building Trust, Navigating Politics, and Tailoring Reform takes a fresh look at tax reform. The authors draw on recent research and experience for their new conceptual framework to guide more effective approaches to reform. Building on the achievements of recent decades, they argue for a greater emphasis on the overlapping goals of building trust, navigating political resistance, and tailoring reform to unique local contexts - an emphasis achieved by identifying the most binding constraints on reform. This focus not only can lead to greater compliance, a fairer system, and higher revenues, but also can contributeto building state capacity, sustained political support for further reforms, and a stronger fiscal contract between citizens and governments