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Fighting fiscal corruption: The case of the Tanzania Revenue Authority

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  • Odd-Helge Fjeldstad

Abstract

Over the last decade several African countries have undertaken comprehensive reforms of their tax administrations, with the aims of increasing revenue and curbing corruption. This paper examines recent experiences in the fight against corruption in the Tanzania Revenue Authority. Two lessons of broader relevance are highlighted. Firstly, even with relatively high wages and good working conditions, corruption may continue to thrive. In a situation where there is high demand for corrupt services, it is unrealistic to provide tax officers with pay rates that can compensate for the amount gained through bribery. Without extensive and effective monitoring wage increases may produce a highly paid but also highly corrupt tax administration. Secondly, hiring and firing procedures may lead to more corruption. Corrupt tax officers often operate in networks, which also include external actors. The manner in which the administrative reform was implemented in Tanzania, where many of those fired were recruited to the private sector as 'tax experts', seems to have strengthened the corruption networks. This partly explains why the positive process experienced in the initial phase of the new revenue authority was later reversed.

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Bibliographic Info

Paper provided by CMI (Chr. Michelsen Institute), Bergen, Norway in its series CMI Working Papers with number WP 2002:3.

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Length: 15 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:chm:wpaper:wp2002-3

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Keywords: Corruption Tax evasion Tax administration Incentives;

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References

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  1. Fjeldstad, Odd-Helge & Tungodden, Bertil, 2003. "Fiscal Corruption: A Vice or a Virtue?," World Development, Elsevier, vol. 31(8), pages 1459-1467, August.
  2. Jean Hindriks, Michael Keen and Abhinay Muthoo, . "Corruption, Extortion and Evasion," Economics Discussion Papers 470, University of Essex, Department of Economics.
  3. Gillespie,Richard, 1993. "Manufacturing Knowledge," Cambridge Books, Cambridge University Press, number 9780521456432, April.
  4. Alm, James & Bahl, Roy & Murray, Matthew N, 1991. "Tax Base Erosion in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 39(4), pages 849-72, July.
  5. Sheetal K. Chand & Karl Ove Moene, 1997. "Controlling Fiscal Corruption," IMF Working Papers 97/100, International Monetary Fund.
  6. Fjeldstad, O.H., 2001. "Fiscal Decentralisation in Tanzania: For Better of for Worse?," Papers 2001:10, Universitat Zurich - Wirtschaftswissenschaftliches Institut.
  7. Janet Gale Stotsky & Asegedech WoldeMariam, 1997. "Tax Effort in Sub-Saharan Africa," IMF Working Papers 97/107, International Monetary Fund.
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Citations

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Cited by:
  1. Christian von Soest, 2006. "Measuring the Capability to Raise Revenue Process and Output Dimensions and Their Application to the Zambia Revenue Authority," GIGA Working Paper Series 35, GIGA German Institute of Global and Area Studies.
  2. Richard M. Bird, 2014. "Administrative Dimensions of Tax Reform," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 963-992, November.
  3. Warlters, Michael & Auriol, Emmanuelle, 2005. "The marginal cost of public funds in Africa," Policy Research Working Paper Series 3679, The World Bank.
  4. Odd-Helge Fjeldstad, 2002. "The fight against corruption and the role of parliamentarians," CMI Working Papers WP 2002:6, CMI (Chr. Michelsen Institute), Bergen, Norway.
  5. Kjetil Bjorvatn & Gaute Torsvik & Bertil Tungodden, 2005. "How Middle-men can Undermine Anti-corruption Reforms," CMI Working Papers WP 2005: 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
  6. Fjeldstad, Odd-Helge, 2013. "Taxation and development: A review of donor support to strengthen tax systems in developing countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  7. Espen Villanger, 2003. "Company influence on foreign aid disbursement: Is conditionality credible when donors have mixed motives?," CMI Working Papers WP 2003:4, CMI (Chr. Michelsen Institute), Bergen, Norway.
  8. World Bank, 2004. "Investment Climate Assessment : Improving Enterprise Performance and Growth in Tanzania," World Bank Other Operational Studies 14413, The World Bank.
  9. Christian von Soest, 2006. "How Does Neopatrimonialism Affect the African State? The Case of Tax Collection in Zambia," GIGA Working Paper Series 32, GIGA German Institute of Global and Area Studies.
  10. Hasker, Kevin & Okten, Cagla, 2008. "Intermediaries and corruption," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 103-115, July.
  11. Lund, Jens Friis & Treue, Thorsten, 2008. "Are We Getting There? Evidence of Decentralized Forest Management from the Tanzanian Miombo Woodlands," World Development, Elsevier, vol. 36(12), pages 2780-2800, December.
  12. Mikhail Drugov & John Hamman & Danila Serra, 2014. "Intermediaries in corruption: an experiment," Experimental Economics, Springer, vol. 17(1), pages 78-99, March.
  13. Espen Villanger, 2003. "Company interests and foreign aid policy: Playing donors out against each other," CMI Working Papers WP 2003:5, CMI (Chr. Michelsen Institute), Bergen, Norway.
  14. Anders Fredriksson, 2013. "Bureaucracy Intermediaries, Corruption and Red Tape," Working Papers 1202, University of Namur, Department of Economics.
  15. Joseph R.A Ayee, 2005. "Working Paper 82 - Public Sector Management in Africa," Working Paper Series 217, African Development Bank.
  16. Cagla Okten Hasker & Kevin Hasker, 2005. "Intermediaries and Corruption," Departmental Working Papers 0514, Bilkent University, Department of Economics.

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