Report No. PID11161
Project Name             Mexico-Tax Administration Institutional (@)
Development
Region                   Latin America and Caribbean Region
Sector                   Public Financial Management
Project ID               MXPE77602
Borrower(s)              MINISTRY OF FINANCE
Implementing Agency
Address SERVICIO DE ADMINISTRACION
TRIBUTARIA (SAT)
Address: Hidalgo 77 Modulo I, ler piso
Col. Guerrero 06300 Mexico, D.F.
Contact Person: Lic. Adriana Cuevas
Argumedo
Tel: 52-55-5229-4406
Email: acuevas@shcp.ssi.gob.ms
Environment Category     C
Date PID Prepared        May 3, 2002
Auth Appr/Negs Date      May 3, 2002
Bank Approval Date       June 18, 2002
1. Country and Sector Background
Mexico has to continue to modernize its economy and to reduce
poverty. In order to do so, it particularly needs to invest more in human
resource development and public economic infrastructure in order to
complement private enterprise investment in the productive sectors. In
turn, studies show that the public sector needs to increase its resources
for those processes to be enlarged and sustained over the long term, for
which domestic revenue collections need to be increased. .          Recent
legislative approval of the Government's fiscal reform proposals will help
expand the taxpayer base and facilitate other measures that should net
additional public revenues. However, much will depend on upgrading the
quality of Federal tax administration, which is the function of the Tax
Service (SAT). The latter has begun several worthwhile initiatives but it
has recognized the need for technical assistance to do more, and to
strengthen their implementation.
2. Objectives
The project development objectives are to support the institutional
development of the SAT in a manner which:          a. Promotes improved,
sustained revenue performance on the basis of voluntary compliance and
reduced evasion and corruption; and             b. Improves the
effectivenss and efficiency of tax administration through (i)
strengthening collection, audit and enforcement capability; (ii)
broadening the tax base; (iii) advancing better tax services, taxpayer
education and simplification of procedures; and (iv) upgrading
operational, planning, human resource, information and internal control
management.



3. Rationale for Bank's Involvement
The project supports Mexico's efforts to reduce poverty and enhance
social sustainability. The Bank's value added would be to bring to the SAT
the lessons of international experience and "best practices" in projects
with similar characteristics.
4. Description
The project would support changes in the following areas:-- Management and
Organization: Development of a multi-year strategic plan, a framework for
measuring SAT's results, a review of the organizational structure, and an
information management framework.--Management of SAT's human, physical and
financial resources --SAT's information infrastructure--Collections and
auditing--Client services
5. Financing
Total ( US$m)
BORROWER                 $30.00
IBRD                     $52.00
IDA
Total Project Cost       $82.00
6. Implementation
The project will be implemented by the SAT, with Nafin SA serving as the
financial agent for the Loan.
7. Sustainability
There are favorable prospects for the sustainability of the projected
investments and their benefits. There are positive indications of
protracted, durable Government commitment to the Project objectives. The
latter are closely aligned with Mexico's long term strategic development
goals, which are unlikely to be altered by transitional events. The SAT
is well endowed with the necessary professional and managerial competence
and orientation.
8. Lessons learned from past operations in the country/sector
The project incorporates lessons learned from Bank Tax Administration
Projects considered to be examples of their kind Russian Federation Second
Tax Modernization Project (January 2002); Latvia State Revenue
Modernization Project; (October 1998); Guatemala Tax Administration
Technical Assistance Loan (August 1997); Turkey Public Financial
Management Project (August 1995); , as well as related projects; OED's
Lessons and Practices - Technical Assistance, Report Number 7 (May 1996);
and Reforming Tax Systems: The World Bank Record in the 1990s, a report
prepared by Tax Policy and Administration Thematic Group. expand and
deepen.
9. Program of Targeted Intervention (PTI)     N
10. Environment Aspects (including any public consultation)
Issues     :  The proposed project is expected to have no
environmental impact.
11. Contact Point:
Task Manager
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Steven Benjamin Webb
The World Bank
1818 H Street, NW
Washington D.C. 20433
Telephone: 202-473 8680
Fax: 202-522-2119
12. For information on other project related documents contact:
The InfoShop
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 458-5454
Fax:        (202) 522-1500
Web: http:// www.worldbank.org/infoshop
Note: This is information on an evolving project. Certain components may
not be necessarily included in the final project.
This PID was processed by the InfoShop during the week ending
May 10, 2002.
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