The main objective of this paper is to provide support for the World Bank’s task team leaders of PERs that would include a chapter on taxation.
... See More + It seeks to provide broad guidance for the TTLs to: (a) Lead dialogues with client countries on the scope of the tax chapter in view of Government’s on-going and planned reforms of tax policy and/or tax administration; (b) Evaluate the magnitude of data requirements and limitations in the country-specific context; and (c) Establish an appropriate team, particularly consider selection of technical staff or consultant and discuss with the team on scope of the chapter on taxation and suitable analytical tools and techniques to be applied. The paper may also serve as a helpful input on tax components in the preparation of lending operations, in this way supplementing other diagnostic tools. To serve these objectives, the paper aims to presents an overview of major taxes and respective list of data requirements as well as possible sources; tool and techniques in assessing the efficiency, effectiveness and equity in tax policy design (at both national and sub-national levels) and tax administration. In doing so, the authors acknowledge that this is not a straightforward task. No one-size-fits-all approach would exist to covering the revenue chapter, and this is driven by the complexities on the ground in terms of (1) the existing literature, and the mismatch between rigorous application of appropriate tools and techniques on the one hand and data available on the other; (2) existence of or immediate plan for parallel studies on tax revenues (including the IMF TA on tax policy and administration being provided); (3) the country’s economic structure, including the factors such as country’s abundance of extractive resources or aid dependence; and (4) the government’s requests for further support in revenue mobilization (tax policy or administration or both). This paper consists of four parts. The first part discusses major taxes at the national or central level of government with a reference to generally accepted notion or principles of a ‘good’ tax system. Part two is focused on the major tools and techniques for analysis of the performance of a tax system and of tax expenditures. The discussion of revenue modeling covers different methods, such as GDP based, micro-simulation, national accounts/inputs-outputs tables based and regression analyses. Part three sheds light on subnational government taxation. It covers the revenue issues at both at the regional and local levels. In addition, it introduces a framework on measuring taxing powers at subnational level, with a view to ensure appropriate ground for the fiscal dialog across levels of government. Finally, part four points to potential questions to assist in assessing the strengths and weaknesses in tax administration, drawing on Jit Gill (2000) and the newly developed tax administration diagnostic tool TADAT (2016).
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This publication consists of seven chapters: building a system for public investment management; a unified framework for public investment management; country experiences of public investment management; approaches to better project appraisal; public investment management under uncertainty; procurement and public investment management; and public investment management for public-private partnerships.
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While debt-financed productive public investment raises a countrys debt ratios in the short run, it can also generate higher growth, revenues, and exports, leading over time to lower debt ratios.
... See More + This paper develops a framework to assess whether countries meet the conditions for realizing the net benefits over the costs of public investment debt financing. While it is possible to achieve debt sustainability with an appropriate mix of concessional and non-concessional financing, this is a necessary but not sufficient condition. It is also important to ensure the operational viability of public investment projects by having in place adequate project management: (i) project screening and appraisal, (ii) a clear connection between capital and recurrent expenditures once the projects are launched, and (iii) safeguards for appropriate project implementation and facilities operations. To illustrate the strength of these results, the paper carries out three measurement exercises: (a) a simulation of the degree to which the ratio of optimal public investment responds to changes in key parameters related to project management in a general equilibrium model; (b) application of the public investment management (PIMa) index to benchmark a country's public investment management capacity; and (c) presentation of the results of the Investment, Savings, and Macroeconomic Vulnerabilities tool aimed at tracking country choices in public finance and the impact of public projects on private investments.
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Policy Research Working Paper WPS6766 FEB 01, 2014
Cavalcanti, Carlos B.; Marrero, Gustavo A.; Le, Tuan MinhDisclosed
The report follows the diagnostic methodology as outlined in Rajaram et al. The diagnostics is based on interviews, a survey questionnaire with government officials, central statistical office (CSOs), and private sector and desk review of related documents.
... See More + The paper identifies the weaknesses in processes and institutions that contribute to poor outcomes of public spending. The government has been conducting a number of reforms in this field, such as overarching public financial management and procurement reforms. However, the public investment management (PIM) remains largely inefficient and certain key functions of project evaluation are missing or in rudimentary forms. To succeed, all the pieces of reforms have to be woven into a coherent framework targeting the weakest links in the PIM system. Multiple factors, including the absence of necessary institutions, unclear institutional mandates, weak capacity, lack of vertical and horizontal coordination, and misaligned incentives drive the inefficiency of PIM. This also implies that pure technical solutions do not guarantee success. As a result this paper suggests that strengthening of the challenge function of the ministry of finance in Zambia is critical for better PIM but a gradual, incentive compatible approach is probably necessary in the current context.
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Working Paper 93365 JAN 01, 2014
Le, Tuan Minh; Raballand, Gael; Palale, PatriciaDisclosed
Over the last two decades, Vietnam has made notable progress in reforming management of public investment. The legal framework on public investment management (PIM) has been continuously improved, covering the entire project management cycle.
... See More + Management of public investment projects still faces several major challenges. The objectives in development strategies and plans are excessively broad and vague, which undermines quality of preliminary screening. The analysis of the study suggests some priorities for PIM reforms. First, the legal framework has to be further strengthened to alleviate the existing fragmentation, duplication, and lack of uniformity of the laws and legislation. Second, decentralization of PIM should be accompanied by measures to increase responsibility and accountability of local governments and line ministries, and to improve their capacity and coordination, particularly in appraisal and monitoring. Third, the approach to monitoring and evaluation (M and E) should be results based, which requires a mechanism to effectively tie in project output and progress with responsibility of agencies in charge of PIM and to enhance participation of the community organizations. Fourth, Vietnam needs to improve statistical system to allow for adequate analysis of public investment and, related to it, adopt realistic and feasible indicators of PIM efficiency to facilitate M and E and ex post project evaluation.
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Working Paper 93363 JAN 01, 2014
Doan, Quang Hong; Le, Tuan Minh; Nguyen, Duong AnhDisclosed
One of the important factors for economic development is the existence of an effective tax system. This paper deals with the concept and empirical estimation of countries' taxable capacity and tax effort.
... See More + It employs a cross-country study from a sample of 110 developing and developed countries during 1994-2009. Taxable capacity refers to the predicted tax-to-gross domestic product ratio that can be estimated empirically, taking into account a country's specific macroeconomic, demographic, and institutional features, which all change through time. Tax effort is defined as an index of the ratio between the share of the actual tax collection in gross domestic product and taxable capacity. The use of tax effort and actual tax collection benchmarks allows the ranking of countries into four different groups: low tax collection, low tax effort; high tax collection, high tax effort; low tax collection, high tax effort; and high tax collection, low tax effort. The analysis provides broad guidance for tax reforms in countries with various levels of taxable capacity and revenue intake.
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Policy Research Working Paper WPS6252 OCT 01, 2012
Le, Tuan Minh; Moreno-Dodson, Blanca; Bayraktar, NihalDisclosed
This note presents policy choices available to natural-resource-endowed countries, that focus on both design and implementation. The literature provides extensive policy guidance in the area of natural resource taxation, which builds on an extensive public finance tradition.
... See More + Most of this work deals separately with technical, economic, and institutional aspects of taxation. The objective of this note is to illustrate how particular policy choices regarding resource taxation policy and administration, can be better understood in the context of the prevailing political economy, and institutional endowments. The note concludes that policy choices are invariably, and predictably, conditioned by a set of dynamics for given country contexts, and it provides guidance on how different starting points shape the prioritization, and sequencing, of certain policy designs in order to enhance both overall rent-capture by the state, and successful and sustained extractive industry investment in the sector
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This volume emphasizes instead the notion of 'good fit,' taking the position that welfare-promoting policies, institutions, and governance must be tailored, at least in part, to a country's specific context.
... See More + In this vein, the volume presents an analytical framework for assessing a country's political economy and institutional environment as it relates to natural resource management and, on that basis, it offers a substantial set of targeted prescriptions across the natural resource value chain that are technically sound and compatible with the identified underlying incentives. In other words, the objective of this book is to help development practitioners unravel the political economy dynamics surrounding natural resource management in order to complement their technically grounded engagement. To this end, the analytical approach has been two-pronged. First, case studies were conducted on the political economy of the hydrocarbon and mineral value chains in 13 countries in the Africa, East Asia and Pacific, and Latin America and the Caribbean regions. Second, in light of this empirical material, the book highlights the current frontier of applied political economy analysis on resource dependence. This volume synthesizes the empirical and the theoretical with an emphasis on illuminating the implications for operational engagement in resource-dependent settings.
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Publication 65957 DEC 08, 2011
Barma, Naazneen H.; Kaiser, Kai; Minh Le, Tuan; Vinuela, LorenaDisclosed
In 2010, after two decades of rapid economic growth, Vietnam passed the threshold to become a lower-middle-income economy. Sustained market-oriented reforms combined with intensive efforts to integrate into the world economy are among the key drivers of this achievement.
... See More + The reform of tax policy and administration has been a vital part of this transition. This is leading to a fundamental change in the composition of taxpayers, from large state-owned enterprises (SOEs) and foreign-invested companies to a myriad of small and medium private enterprises. Economic transition is also leading to an equally important change in the sources of government revenue, away from cross-border trade-related taxes and revenue collection from crude oil toward a greater share of domestic tax revenue, in particular taxation of business profits, labor income, and capital gains on land. However, completing the transition to a market economy will require changes going beyond tax collection and administration procedures, and will involve changes to the tax instruments themselves. At the end of this process, Vietnam should have a set of taxes that is simple and transparent, secures a stable flow of revenues for the government, encourages an efficient allocation of resources, and does not risk constituting a source of inequality or unfairness. The purpose of the series of studies in this volume is to shed light on the issues Vietnam will be facing in the process of reforming its tax policy and administration. The studies are also expected to lead to concrete policy recommendations contributing to the preparation of key policies and legislative documents to ensure the achievement of the state budget revenue target and other tax administration reform targets in the SEDP 2011-2015. It is expected that the individual studies in this series will become useful inputs into the debate surrounding the issuance of new laws and regulations. It is also hoped that the volume will support the reform momentum in the tax policy area, leading to increased efficiency, transparency, and equity.
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In 2010, after two decades of rapid economic growth, Vietnam passed the threshold to become a lower-middle-income economy. Sustained market-oriented reforms combined with intensive efforts to integrate into the world economy are among the key drivers of this achievement.
... See More + The reform of tax policy and administration has been a vital part of this transition. This is leading to a fundamental change in the composition of taxpayers, from large state-owned enterprises (SOEs) and foreign-invested companies to a myriad of small and medium private enterprises. Economic transition is also leading to an equally important change in the sources of government revenue, away from cross-border trade-related taxes and revenue collection from crude oil toward a greater share of domestic tax revenue, in particular taxation of business profits, labor income, and capital gains on land. However, completing the transition to a market economy will require changes going beyond tax collection and administration procedures, and will involve changes to the tax instruments themselves. At the end of this process, Vietnam should have a set of taxes that is simple and transparent, secures a stable flow of revenues for the government, encourages an efficient allocation of resources, and does not risk constituting a source of inequality or unfairness. The purpose of the series of studies in this volume is to shed light on the issues Vietnam will be facing in the process of reforming its tax policy and administration. The studies are also expected to lead to concrete policy recommendations contributing to the preparation of key policies and legislative documents to ensure the achievement of the state budget revenue target and other tax administration reform targets in the SEDP 2011-2015. It is expected that the individual studies in this series will become useful inputs into the debate surrounding the issuance of new laws and regulations. It is also hoped that the volume will support the reform momentum in the tax policy area, leading to increased efficiency, transparency, and equity.
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This paper provides a pragmatic and objective diagnostic approach to the assessment of public investment management systems for governments. Since weaknesses in public investment management can negate the core argument that additional fiscal space allocated to public investments could enhance future economic prospects, attention to the processes that govern public investment selection and management is critical.
... See More + The paper begins with a description of eight key "must-have" features of a well-functioning public investment system: (1) investment guidance, project development, and preliminary screening; (2) formal project appraisal; (3) independent review of appraisal; (4) project selection and budgeting; (5) project implementation; (6) project adjustment; (7) facility operation; and (8) project evaluation. The emphasis is placed on the basic processes and controls (linked at appropriate stages to broader budget processes) that are likely to yield the greatest assurance of efficiency in public investment decisions. The approach does not seek to identify best practice, but rather to identify the "must have" institutional features that would address major risks and provide an effective systemic process for managing public investments. The authors also develop a diagnostic framework to assess the main stages of the public investment management cycle. In principle, the identification of core weaknesses will allow reforms to focus scarce managerial and technical resources where they will yield the greatest impact. In addition, the framework is intended to motivate governments to undertake periodic self-assessments of their public investment systems and design reforms to enhance the productivity of public investment.
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Policy Research Working Paper WPS5397 AUG 01, 2010
Rajaram, Anand; Le, Tuan Minh; Biletska, Nataliya; Brumby, JimDisclosed
The World Bank relies in part on economic benefit estimates to evaluate the merits of investment projects. Recent lending operations for revenue administrations in Vietnam have led to some rethinking of these calculations.
... See More + This Note shares their findings and it also provides some pointers that may be useful in estimating the economic benefits of revenue reform projects. Earlier estimates and their shortcomings are closely looked at, as well as customs administration and tax administration. This guidance can also assist in preparation of the technical annex of the financial and economic analysis of individual projects as required by World Bank guidelines.
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Brief 39623 MAR 01, 2007
Minh Le, Tuan; Pham, Duc Minh; De Wulf, LucDisclosed
