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Tax Farming: A Radical Solution for Developing Country Tax Problems?
Staff Papers (International Monetary Fund)
Vol. 40, No. 1 (Mar., 1993), pp. 217-225
Stable URL: http://www.jstor.org/stable/3867383
Page Count: 9
You can always find the topics here!Topics: Taxes, Tax farming, Tax collection, Revenue, Administrative expenses, Private sector, Developing countries, Public administration, Government bureaucracy, Tax reform
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Ineffective tax administration is a chronic problem in many developing countries. A radical solution is tax farming, whereby the right to collect certain taxes is auctioned off to private sector collectors. Proponents argue that it minimizes administrative costs and results in more efficient collection. The purported gains are largely illusory, however. Because the system leads to overzealous collection, a government would have to expend considerable resources on monitoring private tax collectors. If taxpayer abuse is to be avoided, only unambiguous activities could be privatized. The scope for privatizing the core functions of tax administration thus appears limited.
Staff Papers (International Monetary Fund) © 1993 International Monetary Fund