Joel Tan-Torres, Commissioner of the Bureau of Internal Revenue in the Philippines has offered reasons why it is so hard for developing countries to collect tax. He says:
- Too few staff
- Staff too lowly paid so high turnover
- Poor IT
- Slow speed of enforcing action through the legal system.
- Problem of special interest tax provisions
- The aggressiveness of the tax industry in promoting avoidance bordering on evasion. Tax evasion is at least 0.03% of GDP in the Philippines — which seems surprisingly low to me, but then so is the tax yield.
In many ways this sounds like the UK but let’s have no doubt. In terms of scale everything is worse.
What he needs he says is information. Internally generated sources are not enough in the current world. He appears to be asking for automatic information exchange, but without being specific. What he does say is that expertise will need to be developed to make this work.
Volume issues regarding information will need technology support — but it’s clear, it’s our job to do this. This has to be a key component in the development agenda.