Tax Administration Reform in Transition: The Case of Croatia

The paper discusses the basic issues of modern public administration in general and tax administration in particular, trends in their development and reforms in tax administrations. The main weight in reforms concerns problems of prevention of tax evasion, measures for making tax administration more efficient and reducing the complexity of taxation laws. Special attention is paid to tax administrations in transition countries with an emphasis on public officials, "big state", revenue collection problems and tax administration reforms. Particular problem of running the state in small countries is also discussed. It can be concluded that modern tax administrations are concerned with a stronger focus on taxpayers, specialisation of personnel, independence from the ministries of finance and privatisation of those areas which could be better performed by the private sector. In order to accomplish the above mentioned goals, many countries have set in motion tax administrations reforms aimed at solving some of the key problems such as low salaries and the connected problem of attracting high quality personnel, corruption among tax administration personnel and complex and incomprehensible tax laws. Most reforms stress functional organisation of tax administration, organising a special customer service units and separate departments to deal with the largest enterprises. This should also reduce tax revenue collection costs and help to prevent tax evasion. The extent to which Croatia, as a transition country, a small country and a country carrying out reform of its fiscal system (including tax administration reform), fits in with the processes described above is discussed in detail. Suggestions for further improvement of tax administration in Croatia are also given.