Tax Collection in Developing Countries – New Evidence on Semi-Autonomous Revenue Agencies (SARAs)

Abstract

Over the last two decades, semi-autonomous revenue agencies (SARAs) have become a key element of public administration reform. They are supposed to improve revenue mobilisation and stabilise state-taxpayer relations. But do SARAs really outperform conventional tax administrations? This article argues that they do. Presenting the results of a panel analysis of local tax collection in Peru between 1998 and 2011, it shows that municipalities with SARAs collect more revenue than those with conventional tax administrations. The results also indicate that local revenue is more stable in municipalities with SARAs, which is good for budget policy and planning.

Taxation and the Unequal Reach of the State: Mapping State Capacity in Ecuador

“…Subnational governments in the region now collect a higher share of total government revenue than at any point in modern history (Daughters and Harper ; von Haldenwang et al. ).…”

The Punjab Revenue Authority: Meeting the challenges of a new institution

“…One of the major challenges that developing countries face is how to improve tax administration (Devas, Delay, & Hubbard, ; Fjeldstad, ; Ohemeng & Owusu, ; von Haldenwang, von Schiller, & Garcia, ; von Soest, ). One of the solutions that is increasingly used in the developing country contexts is that of a (semi)autonomous revenue authority (SARA; see, e.g., Crandall, ; Devas et al, ; Fjeldstad, ; von Haldenwang et al, ; Ohemeng & Owusu, ; Taliercio, , ; Therkildsen, ). The revenue authority (RA) model entails removing revenue collection from the finance ministry into an agency that has a certain degree of financial and functional autonomy (Ohemeng & Owusu, ; Taliercio, ; von Haldenwang et al, ).…”

“…One of the solutions that is increasingly used in the developing country contexts is that of a (semi)autonomous revenue authority (SARA; see, e.g., Crandall, ; Devas et al, ; Fjeldstad, ; von Haldenwang et al, ; Ohemeng & Owusu, ; Taliercio, , ; Therkildsen, ). The revenue authority (RA) model entails removing revenue collection from the finance ministry into an agency that has a certain degree of financial and functional autonomy (Ohemeng & Owusu, ; Taliercio, ; von Haldenwang et al, ). The proponents of this institutional model argue that an autonomous RA would be able to offer better incentives for its employees (e.g., more competitive salaries) and have more flexible decision‐making procedures and, through that, increase revenue collection (Devas et al, ; Fjeldstad, ; von Haldenwang et al, ; Taliercio, 2004; Therkildsen, ).…”

“…The revenue authority (RA) model entails removing revenue collection from the finance ministry into an agency that has a certain degree of financial and functional autonomy (Ohemeng & Owusu, ; Taliercio, ; von Haldenwang et al, ). The proponents of this institutional model argue that an autonomous RA would be able to offer better incentives for its employees (e.g., more competitive salaries) and have more flexible decision‐making procedures and, through that, increase revenue collection (Devas et al, ; Fjeldstad, ; von Haldenwang et al, ; Taliercio, 2004; Therkildsen, ). SARAs have been adopted in more than 50 countries (von Haldenwang et al, ).…”

“…The proponents of this institutional model argue that an autonomous RA would be able to offer better incentives for its employees (e.g., more competitive salaries) and have more flexible decision‐making procedures and, through that, increase revenue collection (Devas et al, ; Fjeldstad, ; von Haldenwang et al, ; Taliercio, 2004; Therkildsen, ). SARAs have been adopted in more than 50 countries (von Haldenwang et al, ). The assessments of the performance of autonomous revenue authorities have been mixed.…”