Linking Tax Administration Reform with Tax Reform

Tax reform and tax administration are closely linked. However, these links are not always fully discussed, fully analyzed, or even fully appreciated. In this paper, I discuss the links between tax administration reform and tax reform. I begin by discussing some basic aspects of tax administration, which suggest three "paradigms" for tax administration that emerge from the theoretical and empirical literature on what motivates individuals to pay -- or not to pay -- their taxes. I then summarize the main reasons why countries reform their tax systems and when these reforms are most likely to be successful and even to occur. This then leads to a detailed discussion of the central role of tax administration reform in tax reform, including an examination of the role of new technologies in tax administration. My main conclusions are twofold. First, a successful reform of a country's tax system requires also a concomitant and concurrent successful reform of a country's tax administration. Second, successful tax administration reform needs to go well beyond changes in enforcement policies alone.