Evaluation of Tax Administration Efficiency Data Envelopment Analysis (DEA)

Evaluation of Tax Administration Efficiency Data Envelopment Analysis (DEA)

Tax policy and tax administration are the most important part of every tax system reform. The tax administration efficiency of 30 ATAF member countries was analyzed using the Data Envelopment Analysis (DEA). Three DEA analysis with 5 input and 4 output parameters have been used to measure tax administration efficiency. For the year 2019, 50% of tax administrations were found relatively less efficient. During the period 2016-2019, the average efficiency of tax administrations has increased by 4.1% from 74.3% to 78.4% while tax-to-GDP ratio increased by 0.44%. It can be inferred that there is a likely correlation between more efficient tax administration and higher tax-to-GDP ratios. Combining different diagnostic tools to assess the health of tax administration, peer learning, and tax data and statistics are some of the policy recommendations. As tax administration reform is a continuous process it is important to look closer into the main reasons of less relative efficiency for each tax administration separately as well as to do a separate analysis for efficient units.

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