thematic_series13

Introduction

Tax Administration/Social Role

Accountability

• The Development and Strengthening of the Citizens’ Trust: TheAccountability Mechanisms in the Tax Administrations / GermaniaMontás Yapur. -- In: 44th CIAT General Assembly, Montevideo,Uruguay,2010.

• Creating and Building Trust in Citizens: The Tax AdministrationReportingMechanisms/PhilippeDufresnoy.--In:44thCIATGeneralAssembly,Montevideo,Uruguay,2010.

Communication Policies

• Policies for Communicating with Society and New Methods forRenderingthemMoreEfficient/EdwardKieswetter.--In:42thCIATGeneralAssembly,AntiguaGuatemala,Guatemala,2008.

• Policies for Communicating with Society and New Methods forRendering themMoreEfficient / JoséAntonio deAzevedoPereira.--In:42thCIATGeneralAssembly,AntiguaGuatemala,Guatemala,2008.

Tax Education

• StrategiestoDevelopaTaxCulture/CarolinaRoca.--In:42thCIATGeneralAssembly,AntiguaGuatemala,Guatemala,2008.

• TheSocial Role of theTaxAdministrations / Beatriz Luisa Fontau.--In:39thCIATGeneralAssembly.BuenosAires,Argentina,2005.

Contents

CIAT Tax Thematic Series

Inanefforttoprovideaneverbetterandhighlyqualifiedtaxinformationservice to its member countries, the Inter-American Center of TaxAdministrations hereby presents the thirteenth issue of the CIAT TaxThematicSeries.

The purpose of this series is to disseminate relevant information onspecific taxation issuestosupport theresearchandstudyworkcarriedoutbythetaxadministrationsoftheCIATmembercountries.

Thebibliographicalmaterialof thisthirteenth issue isdevotedto“Tax Administration/Social Role”. The material gathered includes studiesand papers prepared by technical officials for presentation either atthe general assemblies or technical conferences, essays, researchscholarships and articles published in the tax administration review,amongothers.

Tospeedup thesearchand recoveryof informationageneral tableofcontentsandindexispresentedforeachpaper.ThedocumentsthatarepartofthisissueareavailableintheCIATVirtualLibraryandwebpage:www.ciat.org

ThroughthisnewdocumentarycontributionCIAT,hopestodisseminatethe bibliographical material existing in the Jorge Eduardo CorradineLibrary,forthebenefitofthetaxadministrations.

Introduction

Accountability

1. Introduction.

2. DGII’s strategies to inform taxpayers and the society at large.

3. To conclude

The Development and Strengthening of the Citizens’ Trust: The Accountability Mechanisms in the Tax Administrations

Germania Montás YapurDominican Republic

SUMMARY

Over the last years, the General Directorate of Internal Revenue (DGII, in Spanish) of the Dominican Republic has been developing an information program for taxpayers and the society at large, which is an integral part of the information that it publishes for accountability purposes. This document is concerned with the experiences obtained from the execution of such program, which have been the basis for its preparation.

The abovementioned program started in 2005 within the framework of the DGII’s strategic planning, and its purpose is for citizens-taxpayers to be able to access the DGII’s website for information, rather than asking for information.

This paper addresses the approach and the scope of the strategy intended for the development of an accountability culture, and considers the essential elements to achieve this paper’s objectives, namely: what are the reasons to promote accountability; why it is important to promote it, how it relates with the officers’ law and ethics and the importance of measuring citizens’ perception of the DGII’s performance by means of surveys.

Finally, the DGII’s point of view is discussed, which believes that the promotion of accountability and citizens’ information is part of its transparent management.

1. INTRODUCTION

Within the framework of the concepts of governance or corporate governance, the set of good accountability practices is usually identified with the English term “accountability”; however, the Latin American Center for Development Administration (CLAD, in Spanish) in the CLAD’s 2000 Scientific Council adopted the Spanish translation of such term as “responsabilización”. While this word may seem confusing, there are experts on the issue of accountability who have already adopted it in their studies.

In public entities, mainly those with a “technical” profile, whose performance is measured exclusively against quantitative goals achieved from operating efficiency and effectiveness, as is the case of the Tax Administrations, the practice of Accountability is formulated through two logics, as stated by IDB’s specialist Koldo Echebarría1: One logic concerned with the strict performance of the regulations established for public management practice, and another logic that pursues the attainment of objectives and the presentation of results. Striking a balance between exercising a rule-centered public management and achieving the expected results stands as a big challenge for the institutions who want to incorporate accountability as an integral part of their work. Echebarría believes this situation is “a real dilemma that should be considered in any accountability strategy, which has proven particularly difficult in the case of State officers”.

Despite this dilemma, there is no doubt that accountability is an essential aspect in a reform process aimed at achieving a modern state. A modern state should have efficient and effective mechanisms so that their citizens may know what it is being done, how it is done and assess its performance.

Proper accountability is a key factor to achieve an adequate image of the Tax Administration, to the extent that it provides the citizens-taxpayers with the tools to assess performance and compliance with an organization responsible for administering laws.

1 See the article on Managerial accountability and responsibility: institutions rather than instruments, from CLAD’s book on Public man-agement accountability and assessment.

Tax Thematic Series No. 13- July 2011

2 TAx ADmInISTrATIOn/SOCIAL rOLEGermania Montás Yapur(Dominican Republic)

While the Tax Administration enjoys the lawfulness deriving from the body of rules of each country’s public finances, we believe that its legitimacy is obtained from the ethic and responsible exercise of the authority conferred by the law upon the Tax Administration.

The society’s perception that the Tax Administration exercises its functions in accordance with the laws and the tax equity principle, reasonably and efficiently as to the administrative and financial areas, will definitely bring about a legitimacy that will facilitate the entity’s operations.

The 2009 International Transparency Barometer reports on an increasing concern for corruptive practices inside the private and the public sectors. According to this document, more and more citizens perceive the private and the public sectors as corrupt; i.e., organizations and institutions at large.

The study shows that nearly 7% of the respondents have bribed the tax authorities around the world once. To gain the citizens’ respect, the law enforcement authority should prove to be in compliance with the applicable laws. This entails a greater commitment from the tax authorities to showing society that they abide by the laws and the ethics.

This document will explain how the DGII has adopted accountability and citizens’ information as part of its work; what mechanisms have been used to bring forward to the interested parties the information regarding the institution’s performance.

2 DGII’S STRATEGIES TO INFORM TAXPAYERS AND THE SOCIETY AT LARGE

The DGII’s Vision includes the commitment to being a credible and prestigious organization. The attributes of credibility and good reputation are cultivated through the observance of the laws, the ethical and unobjectionable professional conduct of its officers, the fulfillment of the undertakings and goals assumed by the organization as to the society and its accountability.

The taxpayers and the society at large will believe an organization is credible to the extent that their interaction with it meets their expectations, and based on the information at their disposal to give an opinion on its performance. This is why our vision is to:

“Become a prestigious and credible organization that uses policies, procedures and information systems that operate efficiently, staffed by ethical and professionally unobjectionable people who abide by the norm of increasing tax collection steadily, reducing tax evasion and respecting taxpayers’ rights”.

For the DGII, accountability is part of its work. We believe that the organization’s legitimacy has partly to do with its transparent practice. Even though the DGII as a public entity has its own institutional legitimacy, a power stemming from its own reason d’etre, what is pursued is that the institution may gain greater legitimacy as a result of the manner it exercises such power.

Given the relevant role the DGII assigns to information, the Strategic Planning defines four objectives. Among them one stands out that relates to the topic of this paper: “To create efficient information mechanisms for taxpayers and the society at large”.

Therefore, a citizen-taxpayer information scheme on the DGII’s actions has been designed, and it is divided into four segments:

Tax Thematic SeriesNo. 13 - July 2011

3TAx ADmInISTrATIOn/SOCIAL rOLE Germania Montás Yapur(Dominican Republic)

• Administrative-financial performance. It concerns the administration of the funds received by the DGII as an autonomous entity2 to cover expenses and investments, and with relation to the compliance with the regulation on acquisitions.

• Performance as a collection entity. Its plan to achieve the collection goal and the results obtained. • Income and assets of its employees and officers.• On taxpayers’ obligations and how to fulfill them3. It concerns the education strategy and the

services provided by the DGII, which are covered by this document.

Accountability is regarded as part of good corporate governance practice. While it is a duty of tax administrations that the DGII should operate adequately, it is also a duty that citizens should know what the DGII does, how, and be able to assess it. This decision goes beyond the legal reporting requirement ruled in the Dominican Republic by the General Act 200-04 of Free Access to Public Information, of July 28 of 2004.

This regulation provides wide powers to Dominican citizens regarding public information; in this sense, it establishes that all the persons are entitled to request and receive thorough information on any branch of the Dominican State and on all corporations and businesses having state participation.

The information referred to in the Law should be contained in the records and files of the public administration, which are documents kept in written, visual or sound means, or otherwise, which fulfill public purposes or objectives; and are provided as long as they do not affect the national security, the public order, the public health or moral, or the privacy rights or reputation rights of third parties. The law provides some limitations and exceptions as to the delivery of information where the secrecy imposed by the laws or judicial or administrative decisions cannot be violated in certain cases.

On the other hand, the Law establishes that state entities should have a permanent and updated information system regarding all their acts and activities, for which they should, in addition to their publication through the available means, computerize and incorporate such acts and activities into on-line communication systems or similar. So, they must bring in the publication of their respective webpages in order to facilitate the free access to the public with no need of a prior request, in accordance with the above cited Law.

Additionally, they are required to provide the information created or obtained by them or which is in their hands and under their control, and contained in written documents, photographs, recordings, magnetic or digital means or otherwise; including in such information, in the event it is the basis of any administrative decision, any type of financial documentation relative to the public budget or deriving from private financial institutions.

Alternatively, the Application Regulations of the Act 200-04 provide that the state entities and private law bodies receiving resources from the National Budget should create their respective Information Access Offices (OAIs, in Spanish) at which citizens may request the information authorized to them by the law.

2 Section 14 of Act 227-06 provides that “The budget of the General Directorate of Internal Revenue will be two percent (2%) of the effective collection obtained each month from administered taxes”.

3 This aspect will not be discussed in this document since we intend to focus on the information related to the DGII’s performance.



Available information:

In this context, the DGII has set up information mechanisms where the citizen-taxpayer may obtain as much information as possible regarding its management. We have a transparency portal as an integral part of the DGII’s website (http://www.dgii.gov.do/transparencia/Paginas/SeccionTransparencia.aspx), which includes an on-line Public Information Access Office (OAI, in Spanish) and an OAI located in the DGII’s main building, which is the channel whereby any citizen having no access to electronic means may obtain the information required from the institution4.

1) Accountability in the administrative-financial performance environment:

In this environment, one of the objectives is to prove compliance with the provisions of Act No 340-06 on the State’s Purchases and Contracts of Goods, Services, Works and Concessions, and its amendments, and show the manner in which the DGII has expended and invested the resources received for collection purposes. The cited law provides the overall principles and rules governing public contracts, as related to the State’s goods, works, services and concessions.

As an autonomous and decentralized body, the General Directorate of Internal Revenue is subject to the regulations provided for by the National System of Public Purchases and Contracts, established within the context of the Act 340-06 on Public Purchases and Contracts, and its amendments, the Regulation 490-07 and several resolutions issued by the System’s Regulatory Body.

One of the principles governing the acts of the bodies covered by the System is the transparency and publicity principle. According to number 3 of Section 3 of the Act 340-06, the purpose is that “all stages of the public purchases and contracts contemplated in this act should be executed within a context of transparency based on the publicity and dissemination of the acts deriving from the application of this law. Contract procedures will be publicized through suitable means as per the requirements of each process. Any interested party will have free access to the administrative contract file and supplementary information. The use of information technology facilitates the community’s access to the State’s management on such matter”.

Alternatively, Act No 227-06, which grants legal personality, functional, budgetary, administrative and technical autonomy and self-owned assets to the General Directorate of Internal Revenue (DGII), provides the obligation to publicize the financial statements audited by an external firm.

regarding the issue of financial and administrative performance, the DGII has three types of information, all contained in the Transparency Section of our website:

a) Information on budgetary performance: In the DGII’s Transparency Section, taxpayers may access:

I. The Budgetary execution report. Contains staff and current expenses, as well as capital investment with recorded figures and the availability of the monthly and accumulated budget.

II. Special projects: Is a detailed report on the main projects undertaken by the DGII, such as Fiscal Printers and Data Center, along with all the annexes supporting the execution thereof.

4 The DGII’s limitations on the delivery of information are contained in a public document that is included in the OAI’s transparency por-tal, called: GUIDE ON THE EXCEPTIONS AND LIMITATIONS IMPOSED BY THE GENERAL ACT ON FREE ACCESS TO PUBLIC INFORMATION No 200-04 APPLICABLE TO THE DELIVERY OF DGII’S INFORMATION.



III. Tax refunds: Presents outlays or payments made for different tax refund items, broken down by beneficiary, amount, date and item.

b) Information on the purchase and contract process. The Transparency Section shows the following information:

Required by the legislation:

• Public Tender Notices: inform to the citizens the diverse calls made for acquisition processes through the tender modality and the general purpose thereof.

• Bid Terms and Conditions: include the general and technical data on the goods or service being tendered.

• Questions and Answers: present the concerns brought forth by the interested bidders and the institution’s opinions on such regard.

Not required by the legislation:

• Technical report: contains the assessment of the compliance with the evaluation criteria of the different technical and economic proposals submitted by bidders and the final recommendation issued by the Evaluation Committee.

• record of adjudication: contains the final adjudication opinion issued by the Tender Committee, based on the information included in the Technical report and the considerations of its members as to the fulfillment of legal procedures and the institution’s requirements.

• Winning offer: contains the full digitalized copy of the winning bidder’s proposal.• Non-winning offers: contains the full digitalized copies of the non-winning bidders’ proposals. • Letter of adjudication to the winning company: contains a full digitalized copy of the letter

communicating bidder that they has won the bidding process. • Letters to non-winning companies: contain a full digitalized copy of the letters communicating

non-winning bidders that they have failed in the bid. • External administrative audits: they present the reports or opinions of the audits performed to

the DGII’s purchase processes by well-known external auditors to verify the compliance with the provisions established by the effective legislation on state purchases and contracts.

c) DGII’s financial information: This section shows:

• The Balance Sheet, which presents the financial position of the DGII, its assets, liabilities and shareholder’s equity, each account with its properly detailed and identified annexes, cut off monthly and audited at year end by a certified external audit firm.

• Statement of revenue and expenditure: reflects the earned revenue (from budgetary allocation and its own revenues) minus expenditures or payments made, with a detail of each payment made to each beneficiary, along with the amount, date, payment item, etc.

• External financial audits: present the reports or opinions of external audits performed to the DGII’s financial statements by external audit firms and the Chamber of Accounts.

• Cash in banks and banking reconciliation: is the availability of cash in bank accounts.• The DGII as withholding agent: this report presents the DGII’s compliance with the payment

of taxes withheld from salaried workers, individuals, ITBIS [tax on the transfer of industrialized goods and services], etc.



2) Accountability in the environment of a collection entity:

In the DGII’s website there is a Statistics Section that contains periodical bulletins and publications and especially an area devoted to showing the collection results by month and year, with respect to the budgetary estimation established in the national budget and the previous year. These reports include an analysis of each tax collected by the DGII, which is of great usefulness.

Additionally, there is an analysis of the sales behavior in respect of the VAT returns of taxpayers by economic sector. This information has become the primary input for the country’s economic activity calculations.

The fact that the publication of this report is made with respect to the collection results as against the national budget’s allocations, whether these are positive or negative, in the first week of each monthly, is a sign of the DGII’s commitment to rendering accounts to the citizens.

Besides, a summary of the DGII’s plan for the year can be consulted, as well as a document showing the alignment of the executed projects with the strategic objectives.

3) Accountability of income and assets of employees and officers:

In addition to the organization’s information, the DGII’s Transparency Section provides data relating to the officers and employees of the institution. The following can be consulted:

• The Staff payroll: provides a detail of the monthly payment received by each employee, identifying their name, position and salary.

• Income Tax returns and the Assets Annex required from each senior officer (Director and Assistant Directors).

What is pursued through these data is that interested citizens may follow up officers’ performance and be knowledgeable of such officers’ income and lifestyles.

4) Taxpayer’s perception of the DGII:

One way to measure the taxpayers’ perception of the DGII’s performance is by conducting surveys on a representative sample of taxpayers.

In this sense, the DGII has been conducting an image survey each year since 20065, with external companies specialized on this issue. Below are the results of such surveys regarding the overall image, trust, credibility, transparency and ethical reputation. In each graph we show the so-called toptwobox results (the two best types of results: excellent and good), bottomtwobox (the two worst results: bad and very bad) and the neutral or regular zone.

5 The 2005 survey was conducted between October and December of that year by Gallup Dominicana, with a sample error of 5%. The 2006 survey was carried out by the DGII with a sample error of 5%, between September and October of 2006.

In 2007, the survey was conducted by Gallup Dominicana with a sample error of 4%, between May and July of that year. In 2008, MKT Consulting conducted the survey with a sample error of 5%, between February and March of 2009. Atthistime,thefirmAlphaConsultingisconductingasurveywhoseresultswillbeshownintheMaypresentation.



From the graphs it is observed that in the last year the neutral or regular responses go down, while excellent and good responses go up.

OVERALL IMAGE

Toptwobox, Bottombox trends and Neutral (Regular) Zone

76.8

75.5

89.6

19.0 14.89.5

4.3 9.7 0.90.010.020.030.040.050.060.070.080.090.0

100.0

2006 2007 2008

Toptwobox

Regular

Bottombox

CREDIBILITY


ETHICAL REPUTATION

81.1 77.4 86.9

12.6 10.816.4

2.6 10.1 2.30.0

10.020.030.040.050.060.070.080.090.0

100.0

2006 2007 2008

Toptwobox

Regular

Bottombox

OVERALL IMAGE


76.8

75.5

89.6

19.0 14.89.5

4.3 9.7 0.90.010.020.030.040.050.060.070.080.090.0

100.0

2006 2007 2008

Toptwobox

Regular

Bottombox

CREDIBILITY


ETHICAL REPUTATION

81.1 77.4 86.9

12.6 10.816.4

2.6 10.1 2.30.0

10.020.030.040.050.060.070.080.090.0

100.0

2006 2007 2008

Toptwobox

Regular

Bottombox

TRUSTLevel of trust on the DGII, positive answers

(values in %)

89.783.6

96.6

50556065707580859095

100

32006 2007 2008



Inquired on whether they trusted the DGII and consider it a transparent institution, the respondents answered as follows:

TRUSTLevel of trust on the DGII, positive answers

(values in %)

89.783.6

96.6

50556065707580859095

100

32006 2007 2008

TRANSPARENCYDo you think the DGII’s performance is transparent?

(values in %)

95.02

4.98

56.5

85.9

79.0

43.5

14.1 21.0

0102030405060708090

100

1 2 3 42005 2006 2007 2008

No

YES

One indicator on how the citizens perceive the DGII’s performance regarding accountability is the publication by the non-governmental or non-partisan organization Participación Ciudadana (PC)6 of the Transparency ranking, conducted in November 2009. This study is intended to determine the degree of applicability and/or compliance with the Law on Free Access to Information (Act 200-04) by Dominican public institutions.

More specifically, it is aimed at: • Verifying the constitution of Information Access Offices (OAI) and the appointment of Information

Access Responsible (RAI, in Spanish) at public institutions. • Assessing the level of availability of official information on the webpages of public institutions,

pursuant to Section 3 of the Act 200-04 and Section 7 of its regulations.• Verifying the level of responsiveness of public institutions to the requests made by individuals, as

well as of non-governmental institutions within the frame of the Act 200-04.•

6 ParticipaciónCiudadana[citizens’engagement]definesitselfasacivic,non-partisanmovementthatadvocates,coordinatesandlinksthesocial ambit with the public branches. It was constituted to promote the articulation inside the civil society and encourage the engagement of citizens with a view to achieving the political, institutional and democratic reforms required by the republic and a fair and balanced socialdevelopment.ItisthemostprestigiousandinfluentialorganizationofthistypeintheDominicanRepublic.



• Assessing the procedures implemented in the assessed public institutions, for the purposes of the application of the Act on Free Access to Information.

• Comparing the level of applicability of Act 200-04, among the diverse public institutions evaluated.

The study evaluates the transparency information on websites and the OAIs. From this result a grade by category is derived, which ranges from A (greater compliance) to F (worse compliance).

The Direct Observation Registration File used by the PC for the webpage study grouped the observations around the following points:

• Availability of official information on webpages• Updated information on webpages• Overall information on the institution• Regulatory information• Information on officers and employees• Ongoing and updated information services

In the case of the OAI, the following is evaluated7:

Allocation of value by indicatorNo Indicator Relative

valueWeighted

value%

1 Availability of official information 100 50%2 Response to information request 100 30%3 OAI’s structure and resources 100 10%4 Information Access Responsible 100 10%

In this last study, the General Directorate of Internal revenue was classified under the A category, which is indicative of an efficient application and/or compliance with Act 200-04 on Free Access to Public Information, with a score of 92.2 out of 100, placing itself among the best 10.

Of a total of 85 institutions evaluated, only eight, i.e., 9.4%, were classified under the A category.

TO CONCLUDE

Providing effective information mechanisms implying the timely publication of data on DGII’s performance, in anticipation of the citizens-taxpayers’ requests, has been our strategy in the area of accountability. The data is put at the disposal of society with a view that the perception of this organization should be based also on the analysis of the information on the performance of each one of the processes we execute: administrative management and tax management processes.

In this sense, we are content with the results obtained so far, which we have shown as deriving from the results of surveys and analyses conducted by civil society organizations.

7 Theofficialinformationistheinformationthatcanbeaccessedwithoutanyrequest.



Introduction

1. The vectors for “accountability” towards citizens

1.1. The institutional vectors: The LOLF dynamics 1.2. Communications’ policy 1.3. Users’ relation policy: users’ committee

2. Performance report quality tools

2.1. Performance management 2.2. Quality assurance mechanisms

Annex

Creating and Building Trust in Citizens: The Tax Administration Reporting Mechanisms

Philippe DufresnoyFrancia

SUMMARY

The civil duty to pay taxes arises from tax administrations’ ongoing effort. Users must receive but also perceive a quality service. They shall be able to measure the administration’s performance based on a mechanism of public communication. The annual performance report presented in Parliament as well as the related external communication mechanisms stem from the organic law on financial acts (LOLF, as per the French acronym), and tend to meet the foregoing initiatives. In the last few years, an additional contribution has been the implementation of users’ committees, for professionals as well as individuals, at the national level as well as in each department.

Ultimately, the trust relation with citizens (except in the case of fraud) is based on the reliability of the information delivered to them, beyond the quality of service. This fundamental requirement to improve the image and credibility of the administration and taxpayer’s civic duty to pay taxes entails effective monitoring of actual performance. In turn, it is necessary to implement procedures that assure that the processes are undertaken in line with the sector’s norms (auditing, deontology, risk control).

INTRODUCTION

For citizens, although it constitutes a vital element of democracy, acceptance of taxes not always depends on an immediate awareness. Enforcing, sustaining and developing taxpayers’ civil duty to pay taxes, their acceptance of taxes (or social contributions) entails, in addition to the control and punitive aspects, not only facilitating formalities, but also establishing and nourishing a positive relation between them and the Tax Administration, a virtuous circle.

The challenge is to strengthen the acceptance of taxes and its concrete translation into tax compliance, accurately documenting the performance of tax administrations. On the other hand, citizens expect a better service, even the best at the lowest cost. Thus, it is a matter of guaranteeing the quality of service, its traceability and endurance. At the internal Tax Administration level, we shall spur performance, facilitate the channeling of the income from productivity and oversee quality, not only in terms of service efficacy and professionalism, but also risk control and, consequently, the deontological dimension of quality.

Along these lines, after the merge between the General Tax Directorate and the General Public Accounts Directorate in April 2008, the General Public Finance Directorate is paying close attention to this issue, by virtue of the broadness of the the sector under its umbrella, in the tax, accounting, financial and economic spheres. In furthering the initiatives started by the two inherent directorates, it implements in- depth actions: on the one hand, with respect to the vectors that enable accountability towards citizens (1), and on the other, with respect to the tools that enable quality and truthfulness on the performance report and performance conditions (2).

1. THE VECTORS FOR “ACCOUNTABILITY” TOWARDS CITIZENS

Information shall be detailed and reliable; but in addition to being mandatory, it shall be communicated as best as possible to the public.

1.1. The Institutional Vectors: The LOLF Dynamics

1.1.1 The New LOLF Scope

The organic law relative to the Finance laws of 2001 (the LOLF, which was enacted in 2006 and mainly governing the accounting sphere) requires Parliament to vote on and monitor programs that bring together the administrative actions.


12 TAx ADmInISTrATIOn/SOCIAL rOLEPhilippe Dufresnoy (Francia)

This effort enhances clarity of the Tax Administration’s activity for the authorities elected by popular will, with the assistance, if required, of the enforcement authorities such as the Court of Auditors.

Its purpose is to structure the Tax Administration’s proceedings according to a performance and results’ rationale, while the previous text of the law (the organic resolution of 1959) was centered chiefly on the means. Thus, the “LOLF” entailed a considerable innovation in providing a framework and recovering the Tax Administration’s activity. Its scope is no longer limited to the chapters (implying in practice a certain degree of inaccuracy or opacity); Parliament and the Executive branch have envisioned it in terms of consistent programs that express strategic priorities, are detached from past compartments and, owing to their global nature, provide the grounds for Parliamentary control while making tax officials accountable. The question of “why” comes before the “how”. Objective-based management and measurement of results are the core of the LOLF methodology, in order to attach an effective scope to the budgetary principles of universality, truthfulness and regularity. This requirement is made extensive to the certification of Government Accounts (articles 27 and 58 of the LOLF) by the Court of Auditors.

In global terms, the LOLF improves the quality of the information available for Parliament in its role of legislator and monitor, for government and officials in optimizing performance, for the rating agencies and investors and for citizens.

From the technical standpoint, the main counterpart for the greater responsibility delegated and better defined objectives are the asymmetric fungibility that grants flexibility in the use of credits while guaranteeing their appropriate use, but also the strict limitation of credit deferrals, which expresses the demand for more transparency in expenditure.

1.1.2 The Practical Implications of the LOLF for the DGFiP

Accountability regarding a program’s execution requires Parliament to deliver information that is as truthful and complete as possible. A report is drafted to such purpose, which may be supplemented with hearings.

The DGFiP is responsible for the State tax and financial management program as well as the local public sector program, which entails over 8 billion Euros (other programs are included therein). Twenty performance indicators are involved in the program-monitoring effort. Its documentation is released on the first semester of N-1, when the allocation of public finances is discussed. In fact, it is worth highlighting that performance management is assessed under the framework of the multiannual budget 2009-2011. The Finance Bill for 2011 shall constitute the groundwork of a new multiannual budgetary cycle, and for new documentation on performance indicators.

This multiannual dimension deepens the LOLF contribution. It ensures growing continuity and consistency in the objectives and their fulfillment in the program implementation.

Under this framework, the annual performance report to Parliament sets forth, pursuant to the terms of the organic law (Article 54), the performance with regards to the objectives and the values pursued, as well as the related costs (it also provides for the credit transactions’ grounds and the expenses incurred, as well as the expense authorization proceeding).

On the other hand, the DGFiP is strongly involved in the State accounts’ certification process, as operator from the different ministries, as well as actor for its inherent proceedings (such as, revenue accounting).


13TAx ADmInISTrATIOn/SOCIAL rOLE Philippe Dufresnoy (Francia)

1.1.3 Advantages and Disadvantages

The biggest advantage of this procedure is based on the methodological completeness effort with respect to the indicators’ documentation (and the related objectives) and the results’ analysis. Parliament relies on complete information and participates, through the informative debate, in the definition of objectives; it relies on a vision within the continuity of the priorities assigned to the program and their fulfillment: it may conduct an analysis in terms of efficacy and efficiency. The performance report is the starting point for a concrete dialog between Parliament and the DGFiP (parliamentary matters).

A practical disadvantage arises from the limitations that this procedure generates in drafting the indicators and objectives of the program operating budgets for the territorial services (departmental Directorates). Given the large number of indicators of the Annual Performance Program in the “Program Operating Budgets” (BOP, as per the French acronym) (see Annex 1), the calendar is defined by the discussion in Parliament. nevertheless, in the dialog between the central administration and the departmental Directorates (through the Director General delegates) it is worth allowing for timeframes that match the desired objectives and the attainable objectives at the time of defining them.

Additionally, we shall consider a twofold limitation: in order to guarantee clarity for legislators, the number of indicators to follow shall be reduced (this is the DGFiP approach for the 2010 program, reducing the number of indicators by 25%); on the other hand, such indicators shall be a cross-section of the Tax Administration activity (thus, the DGFiP, based on its current strategy, continues monitoring the local public accounts’ quality indicator or the coverage rate of the credits requiring external tax controls).

Finally, the framework for the programs defined by the LOLF, like the multiannual budgetary allocation, are not exclusive to the annual budget discussion. Finance laws shall be amended if required, introducing hues and complicating the interpretation of results.

A current example drawn from the 2010 Finance law is the reform of the tax on professional practice that has hindered the fulfillment of the objective of notifying territorial authorities from their temporary bases.

1.2. Communications’ Policy

- The information delivered to Parliament, no matter how complete and accurate, is aimed at citizens, and no longer exclusive as a communication for the “general public”.

Therefore, the annual DGFIP activity report (summarizing the the program’s annual performance report –rAP (as per the French acronym)-) is available for users at www.impots.gouv.fr. It may be also presented in the users’ committees created in the departments (see item 1.3 hereunder).

In addition, the DGFiP performance is also explained and communicated to the public, since it is included in the ministry’s activity report.

Such reports constitute the opportunity of implementing an external communication policy, so that citizens may clearly perceive the performance report, its context and implications. Communication may also originate within a Directorate or ministry. In recent examples, the communication from the ministry, which creates strong visibility, mainly referred to the results and the external tax policy, but also the State’s real estate property policy.

From the organization’s standpoint, the DGFiP relies on a communication department that reports to the Director General, for the information coming from a Directorate, and in the territorial sphere,



reporting requirements from each head of department. In 2010, a specific initiative was launched to relate to the university world.

Beyond the strict communication of results, it is recommendable to deliver a highly focused communication to different groups under the administration of the tax, accounting and financial authority. The examples that do not strictly refer to tax statements, contribute in building trust and understanding relations. We may refer to the communication towards local elected authorities (whether they are renewed, for training purposes, or to present the DGFiP services, or even in the case of tax reforms that impact their budgets); massive communication regarding income tax statements (it is massive, but experience proved that it may be in series, through letters or e-mail), the use of the Internet whether to document information, or for Questions and Answers, and the involvement of professional tax proceedings, with intermediate agencies (accountants, certified institutions) and the insertion of messages on VAT statements. The advantage of external communication efforts is to provide the target audiences with information, not only technical (this largely depends on all the formats: physical, telephone and electronic), but also the one providing a framework to understand the actions by the Tax Administration, and, just like any great organization that processes information, updated benchmarks that increasingly streamline the user-services relation. The user that trusts the Tax Administration requires fewer contacts therewith.

The limits for communication depend on three features:

- A complex and ever-evolving matter that entails reactivity; - The public’s difficulty in understanding, based on the fact that communication was focused on the

technical details: communication does not replace reception, in general as well as specialized terms; - The need for an appropriate balance between external and internal communication. The message

that the Tax Administration delivers to its users shall not contradict its internal values, but rather assert them. Communication shall be balanced and consistent.

The DGFiP 2009-2010 effort entails fine-tuning a strategic guidelines’ document, with the active participation of over 7000 agents in theme-based workshops. It stands for a strong internal consistency and communication challenge, which shall be in line with external communication.

1.3. Users’ Relation Policy: Users’ Committee

1.3.1 A Space for a Specific Dialog

Since 2004, the Tax Administration has been implementing committees of users, professionals and individuals, at the national and departmental level. They are consultative bodies that seek to gather the concrete analyses of the users, with respect to the enforcement of the texts and the ways and means to improve the quality of the service rendered, based on documentary queries and working meetings. They link representatives from the different sectors of the administration with representative bodies. meetings are scheduled every 6 months approximately. Their works refer to the results obtained by the administration (delivery of the activity report) and, from such starting point, the way to streamline the service rendered.

Such users’ committees constitute an interesting innovation. On the one hand, they supplement the communication policy; and on the other, the action of lobbies, which may be exerted in the drafting of regulation through different channels.

The key advantage is to set forth a space for specific dialog, vis-à-vis law enforcement (forms, relation modalities, summaries, supporting explanations, etc.). What is perceived from the progress or the



progress margins of the Tax Administration, such as the expectations by category of users, is set forth and processed without any issues, more precisely than through surveys (which are useful mostly on the qualitative mode with quality panels, for example, in terms of a form). It enables conveying and listening to practical messages.

At the same time, it guarantees the administration’s openness towards society, and somehow the equivalent of an analysis with “customer” panels. The administration presents its methods and may receive the feedback and a critical opinion from the users who are still taxpayers with an active role. Likewise, users become aware of such instances, which entail rights, of course, but also duties (fulfilling their obligations).

A tangible example of the mechanism’s outcomes is available in the charter of rights and Obligations for the Tax Administration’s users of 2005, with the effective participation of the national committee of private users.

1.3.2. Limits in the Mechanism

Firstly, owing to the time restrictions and the heavy burden on IT that condition the enforcement of tax regulations, users’ committees may only address a given number of issues, mainly, the main tax statements. Their frequency prevents them from focusing on the daily detail of the implementation mechanisms that tend to be very complex. The frequent evolution of the norm also hinders their subsequent assessment.

Beyond this functional limitation, experience has shown that it was easier to find representatives of professional users, mainly at the national level, than of private users. In effect, in the latter case the administration may either deal with associations that challenge the tax from the onset and are less interested in improving its enforcement (even though this is not the purpose of the users’ committees), or rely on counterparts with insufficient representation (such as, a majority from the retirees associations, or social entities). At the departmental level, it sometimes seemed inappropriate to extend full powers to the users’ committees. In fact, their ability to articulate practical proposals is still limited.

2. PERFORMANCE REPORT QUALITY TOOLS

Although it is vital to develop a regular, precise and reactive communication towards the administration’s authorities and users, whether institutional or for the general public, in order to build a relation of trust it is equally important that such communication be based on undisputable elements (otherwise, it would lose credibility and become counterproductive).

To such purpose, it is important to rely on effective performance management, based on strong risk-control means.

2.1. Performance Management

2.1.1. Management Control

Performance management by the DGFiP in 2009-2010 is developing on different fronts: renewed management dialog principles have been set forth and applied, in line with an initiative regarding the tools for management control and a project on the redefinition of indicators. The details of this evolution may be found in Annex 2 hereto.

Overall, management control (and activity monitoring) is aimed at delegating responsibility on the officials at the territorial level or those from the specialized directorates (mainly, by means of the dialog



with the Director General delegates) as well as, at the sub-departmental level, those responsible for the different operating services. It connects the network, while favoring the accurate analysis of deviations and creation of the appropriate corrective action plans.

2.1.2 The Hubs per Sector for the Visible Performance Progress

The certification dimension stands as the supplement for performance monitoring. The objectivity of the performance report is assured by the existence of external counterparts of the administration.

For the DGFiP, it is first a matter of certification for the purpose of collective participation, based on a dozen indicators (see Annex 3), which constitute the dimension of user service quality by 15% (which is in turn audited during the proceedings by the external parties, mainly under the form of “mystery” calls). It is conducted by an external body, the General Financial Inspection Office.

Then, it becomes a matter of certification of benchmarks per sector, such as, onsite customer assistance or the proceedings by a group of inspectors. Such specific quality standards provide the framework for good practices. They may be completed by the “rules of the trade” that define optimal processes (such as a tax audit report) in the specifically internal operation of the services.

The advantage of the certification is to determine an objective framework, traceable to a quality level for a specific sector, which if absent, would be blurry.

The disadvantage lies in the relative burden that monitoring the framework entails (in particular, for the heads of service) as well as, in terms of the quality of user service, in the need of attaching new dynamism to the actions that meet the objective pursued.

On another note, the DGFiP mediators in litigation cases, as well as the development of the administration’s answer, constitute the progress factors in the sectors involved, but also prove to users the quality efforts implemented to their benefit.

2.2. Quality Assurance Mechanisms

The General Public Finance Directorate features proceedings and operations subject to audits by different external auditing agencies: the General Financial Inspection Office of the Court of Audits (as a control body as well as accounts and accountants’ jurisdiction and also as public accounts’ certification), public or private auditors that participate in the general review of public policies.

Firstly, it shall rely on internal quality controls, according to the following three areas:

- In terms of auditing (for internal purposes, without disregarding the external auditor role): this is the case via a national auditing committee, with a national auditors’ mission and departmental missions, the delegates of the Director General who fulfill a coordination mission in this respect;

- In terms of internal control, which called for the implementation of a risk control mission, replicated in each department, and in charge of defining the functional organizational charts in detail and overseeing their compliance in each operating service, with regards to the sector pilots.

Pursuant to the international standards, at the national level such groups directly report to the Director General, and to the head of the territorial office, at the local level. Their dimension is strategic.

- Lastly, the DGFiP oversees the necessary monitoring, through an office devoted to the central administration, more specifically for a financial administration, in terms of deontology.



Conclusions/recommendation: 3 guidelines

The technical framework that CIAT defines emphasizes the improvement of the administration’s image to strengthen their performance with citizens. Three guidelines may contribute in such respect:

Regular performance measurement

Honest citizens demand quality service. Defining objectives, monitoring compliance or analyzing deviations and correcting the path, knowing the related costs, contributes in the creation of awareness of the administration’s answer to this demand. Quality only exists when measured, and measured continuously.

Internally, management control, auditing and internal control may be perceived as burdensome with regards to the operating demands, but nevertheless, they are still the guarantors and advocates of the sector’s correct processes.

Is it necessary to go even further, in the final measurement of the quality perceived? Beyond the surveys, which are a contributing factor, shall we put increasingly more efforts in users’ committees? and subsequently, how shall we rely on truly representative counterparts?

The financial administration, Caesar’s wife

But, citizens’ demand goes even further: upon managing revenue and confidential information, the financial administration shall be irreproachable: not only is it transparent (within the limits set forth by the law) in their objectives and efficiency, but also above suspicion. It shall be Caesar’s wife. The issue entails several dimensions, including deontology and internal control. Service professionalism shall not be detached from strict ethics.

This deontological policy is tied to exemplary tax officials’ behavior. How to translate it in practice?

Communication and pedagogy

The communication policy is a subtle matter. It could not be mistaken for publicity, even if, in practice, it falls under the general framework of government communication. On the basis of the topic under discussion, it may not replace the information functions that depend on the reception. Its scope is general information.

¿Should we ban any attempt at pedagogy and education with the administration officials? Whether on the technical sphere to minimize the need for onsite assistance (with powerful tools like an updated Internet site or an effective telephone customer service), or in earlier stages, especially aimed at students – the seedbed of future citizens with the civil duty to pay taxes.

Annex 2 – The evolution of management control in the DGFIP

I. The unification of the performance management mechanism

The DGFiP pursues a triple objective, defined in its preliminary document on strategic approaches, disclosed in early July, 2009:



- Building a unified management method for the whole network, pursuing the performance, efficiency and accountability objectives, based on legacy mechanisms and procedures from the two merged directorates;

- Establishing new modalities for the management dialog at the inter-regional, departmental and sub-departmental level, based on a simplified and unified management tool, aimed at the heads in the different territories;

- Guiding the reflection upon performance measurement based on fewer and more pertinent indicators.

A. Reflection on the indicators

It is performed within the network and the dialog with the organizations representing officials and is based on a twofold assessment.

Firstly, the number of DGFiP indicators overall (over 250) is quite significant. Not all depend on the same record, some translate objectives, and others provide clarification. But nothing prevents us from thinking that they arise from a tendency towards settlement. Additionally, from a practical standpoint: is a consolidated number of too many indicators compatible with management focused on strategic priorities, in a context of challenges tied to the deep reformed implied by the merger and the consolidation of results, among which many have reached a high level already?

Secondly, the issue of the race towards indicators, or the excessive burden it would represent on the activity of the services, with potential consequences in terms of professional stress, was subject of debate. Consensus is being sought in this respect. It requires in-depth consideration.

If defining an organization’s progress margin based on measurable objectives is deemed healthy, an effort to establish them according to series as the means to enhance and make performance definition more dynamic is also evident. reviewing indicators, based on the analysis at the central administration level as well as field studies, is covered by this scope. It translates according to a reduction in the Program Operating Budget indicators (almost twenty) and a renewed articulation with the activity monitoring mechanism, as automated as possible and aimed at providing context elements if required.

The reflection on the indicators was conducted in depth, with consensus, tied to the preliminary work in workshops on the Strategic Guidelines’ Document, relative to the sectors. In 2010 it shall be translated. It constitutes the background for performance dialog.

Thus, the procedure to apply the national indicators, defined in the fall of 2009, represents a significant stage. A list of almost twenty indicators supports the management dialog. They are based on the application of national indicators (mainly those in the PAP of programs n° 156, 200 and 201 in the PLF 2010). Fourteen of them come from the State and local public sector Tax and Financial Tax management Program, 2 from the reimbursement and exemption programs, and the others from previous performance contracts.

In this panel of indicators, the sectors have defined targets, included in the inter-regional application. The Director General delegates (DDG, as per the French acronym) manage the local application on this basis in the framework of a dialog within the defined set so that the cycle may complete the last iteration with the central administration. The DGFiP subsequently considers such feedback. The DDGs then notify the indicators and the target heads of territorial offices.

These objectives are subject to DDG monitoring, in the course of the year, within the framework of the management dialog.



B. Performance dialog organization

The implementation of the new performance dialog mechanism is organized on the basis of the DDG. This pivot role is understood within the respect to the principle of subsidiarity and accountability at the operating level.

Thus, the performance dialog is established in two phases: within six months after the head of the territorial office takes office and, annually, based on a performance report. The head of the territorial office (or the inter-regional director for tax control (DIRCOFI)), who performs a diagnosis, is responsible for the initiative in each case. The delegate shall analyze this diagnosis and elaborate on it, during an interview, if required. The delegate’s role falls under the framework of the departmental strategy, and does not intervene at the sub-departmental level.

In the case of the initial dialog, a report is drafted at the end of an interview, according to a format defined by the office of the central administration in charge of controlling performance and coordination (BP1A). Based on this synthesis of the organization and the results, leverages, hurdles and priorities to be defined, the delegate writes a preliminary charter of objectives: it is submitted to the central administration for the Director General’s approval.

The charter of objectives determines the principles of the mission and the priorities of the head of the territorial office for his/her term. It is signed by the Director General, and integrates elements that deal with the evaluation of the head of the territorial office. This initial procedure replaces the final procedure, which applied in the former General Tax Directorate (former DGI) and results in a simplification of proceedings.

In the case of the annual performance report, the delegate analyzes the document drafted by the head of the territorial office – with an interview, if necessary – and then delivers it to the BP1A office, which communicates it to the sector’s office. This information delivery process (more refined and improved in terms of analysis with respect to the DIGITEx or DESCArTES tools) seeks to contribute to the examination (crossed) of the sector’s directorates on a given department’s management.

Indeed, such principles may go beyond the sub-departmental management dialog, where certain practices prevailed. The unification process of the tools for performance control shall finish, in the IT sphere, the unification conducted from this moment onwards in the methodological sphere.

This description of the management dialog mechanism is understood if we consider, in its content, the elements contributing to the wealth of shared diagnosis: the causal analysis of situations in retrospective, the evaluation of conditions and the context in which results are obtained, and the focus on the action hubs that have been most adapted.

II. Operation modalities of the unified performance dialog

A. The dialog between the DDG and the heads of the territorial offices

- From the delegations’ standpoint, the dialog has been facilitated in terms of technical knowledge by the increasingly mixed nature of the groups, by assigning to the delegations Chief inspectors and inspectors who specialize in government administration. Given their educational role, the management control efforts (centered, based on their structure, on the performance reports in the course of the first semester, and conducted for the initial dialogs according to the dates featured for turnover in senior positions) are developed in an environment of increasing competition in multiple fields, which shall focus on a multi-skilled approach.



This osmosis is facilitated by the cross-sectional initiatives that delegations shall undertake, not only in terms of monitoring the hubs arising from the merger, but also to establish a monitoring process for the quarterly activity, as defined in the circular letter dated 2 October, 2008 and for the budgetary discussions or the suppression of jobs. As from 2010, the network or working groups’ mutualization initiatives, as well as the oversight of audits, seek to enhance the dialog content and the relevance of the contribution in the mutualization on the action hubs.

- From the directorates’ standpoint, the dialog is the opportunity to structure the activity based on the merger’s dimension overall. This is especially true in the initial dialogs that coincide with the creation of the DrFIP or the DDFIP, which take on a truly managerial dimension for this reason, to make the senior team more consistent and homogenize the new management.

Beyond the managerial dimension, the creation of a DDFIP or DrFIP stands as an opportunity of reviewing the activity monitoring issue, as well as control staff and internal communication of results, acknowledgement factor and the action hubs. The pursuit of a harmonized format and the frequency is relevant to learning about a new dimension for directorates and mutually enhances know-how.

B. Performance dialog at the departmental level

- In the case of the directorates that have not been merged yet, the mission charter mechanism implements the formal application by the head of department of the strategic priorities in the implementation of their departmental management. Of course, the local priorities remained in the definition process, within the continuity of the previous results; the mission letter confers upon the departmental management a deeper field depth and confirms the sub-departmental dialog that had been sustained.

- In the increasingly frequent case of merged directorates in 2010 and in general, as from 2011,

the departmental dialog constitutes the opportunity of assigning a single responsible party in its global framework, given the joint development by the cross-sectional center and the sector-based centers, since it is enforced upon the heads of service to express the new unity in the directorate and concretely translate the merger into the operating commitments.

In the merged directorates, 2010 is the year of a new management, which implements a more systematic dialog; the government administration sphere relies on a chapter on management issues and improvement hubs in addition to the application of the objectives defined. On the other hand, the tax management sphere features the simplification of procedures that could be inspired by the directorate/DDG mechanism (“incoming head of service” procedure followed by an annual simplified stage assessment).

management tends to strengthen the network development role inherent in the directorate.



Annex 1

PAP 2010 IndicatorsProgram 156 – Tax and financial State and local public sector management (09/14/2009)

Objective 1 Completing the merger Indicator 1.1 Deploying the one-stop shopping window (from the user’s standpoint). Indicator 1.2 Number of regional or departmental public finance directorates (from the user’s standpoint). Indicator 1.3 Improvement of the services rendered to the territorial administrations (from the user’s standpoint).

Objective 2 Favoring voluntary compliance with tax obligations (civil duty to pay taxes) Indicator 2.1 Part of the taxes filed or paid voluntarily to the DGFiP

2.11 Rate of individual users who fulfill their tax filing obligation.2.12 Rate of collection of taxes on professional activities.

Indicator 2.2 Gross rate of collection of taxes filed.

Objective 3 Facilitating taxation

Indicator 3.1 Degree of effective implementation of the initiatives in the program “Facilitating taxation” (from the user’s standpoint).

Indicator 3.2 Degree of development of virtual procedures in the DGFiP (from the user’s standpoint).3.21 Part of VAT collection, Corporate Income Tax- IS (as per the French acronym) and Payroll

Tax -ISal- (as per the French acronym) paid by professional users who have adhered to a remote payment procedure.

3.22 Number of remote tax statements - Tele Income Tax- IG (as per the French acronym).3.23 Rate of virtual payment of taxes on individuals (Income Tax-TH-Real Estate Tax).

Objective 4 Reinforcing the struggle against tax fraud and tax and fines’ enforcement

Indicator 4.1 Percentage of controls that punish the most serious types of fraud (from the taxpayer’s standpoint).

Indicator 4.2 DGFiP gross collection rate of duties and fines on external tax control credits for year N-2 (from the taxpayer’s standpoint).

Indicator 4.3 Rate of fines’ payment (from the taxpayer’s standpoint).

Objective 5 Controlling financial administrations’ management costs

Indicator 5.1 Rate of intervention on revenue and expenditure (from the taxpayer’s standpoint).5.11 Rate of intervention on taxes (DGFiP).5.12 Rate of intervention on customs duties (DGDDI).5.13 Global rate of intervention on revenue (DGFiP – DGDDI).5.14 Rate of intervention on Government expenditure (DGFiP).5.15 Rate of intervention on the local public sector’s expenditure (DGFiP).

Indicator 5.2 Annual evolution index of the global DGFiP productivity (from the taxpayer’s standpoint).Objective 6 Improving the quality of accounting procedures

Indicator 6.1 Rate of days-noncompliance verified on the State accounting records (from the user’s standpoint). Indicator 6.2 Rate of compiled data on the qualitative monitoring of local accounts (from the user’s standpoint).



Objective 7 Reducing government expenditure terms of payment

Indicator 7.1 Government expenditure term of payment (from the taxpayer’s standpoint).7.11 Government expenditure global term of payment.7.12 Term of payment for accountants of the local sector expenditure (Administrations under the

Hélios application). Objective 8 Strengthening the quality of the cooperation service for the local public sector

Indicator 8.1 Implementation of virtual procedures in the local public service.8.11 Coverage rate of virtual procedures in the local public sector.

Indicator 8.2 Cooperation agreements with the most important Administrations and the local public businesses. (Rate of weighted coverage of the CSCF) (new)

Objective 9 Accelerating processing terms to optimize the quality of the service rendered to public officials in terms of retirement procedures

Indicator 9.1 Percentage of urgent retirement formalities processes within a two-month term. (from the user’s standpoint)



Annex 1 Bis

INDICATORS(Updated as of 21 December 2009)

Presence in the BOP 2009(Reminder)

National objective

2010I. PAP 2010 IndicatorsObjective 2 : Favoring voluntary compliance with tax obligations (civil duty to pay taxes)2.1 Part of the taxes filed or paid voluntarily to the DGFiP.

2.11 Rate of individual users who fulfill their tax filing obligation. X 98%2.12 Rate of collection of taxes on professional activities. 98%

2.2 Gross rate of collection of taxes filed. X 98.40%Objective 3 : Facilitating taxation 3.1 Degree of effective implementation of the initiatives in the program “Facilitating

taxation”.X 5

3.2 Degree of development of virtual procedures in the DGFiP.3.23 Rate of virtual payment of taxes on individuals (Income Tax-TH-Real Estate

Tax).X 55%

Objective 4 : Reinforcing the struggle against tax fraud and tax and fines’ enforcement4.1 Percentage of controls that punish the most serious types of fraud. X 18.50%

4.2 DGFiP gross collection rate of duties and fines on external tax control credits for year N-2.

43.50%

4.3 Rate of fines’ payment. (rejected under the form of enforced collection of fines and punitive interest)

X 79%(39%)

Objective 6 : Improving the quality of accounting procedures 6.1 Rate of days-noncompliance verified on the State accounting records. X 206.2 IASQCL (not rejected on the BOP 2010, extended from the 2009 objective). X 115 (objective

2009)Objective 7 : Reducing government expenditure terms of payment7.1 Government expenditure term of payment.

7.11 Government expenditure global term of payment. X 28 days7.12 Term of payment for accountants of the local sector expenditure (Administrations under the Hélios application).

7.5 days

Objective 8 : Strengthening the quality of the cooperation service for the local public sector 8.1 Coverage rate of virtual procedures in the local public sector. X 45%8.2 Cooperation agreements with the most important Administrations and the local public businesses.

50%

II. Additional indicators in the BOP 2009 Parts of the requests for VAT reimbursements and Corporate Income Tax refunds with a favorable or partially favorable response, within a term not exceeding 30 days.

X 80%

Rate of contentious claims regarding Income Tax and Residential Tax within a month’s term.

X 95.90%



Increase rate in automatic Local Public Sector (SPL, as per the French acronym) payments (in amount or number).

X 8% (number)7% (amount)

III. Other indicators issued by the CPP followed in 2009 Rate of compliance within a month’s term to provide an answer to the mandatory evaluation requirements for the France Domaine service (QSF3)

93.50%

Enforced collection rate. 55.75%IV. Other indicators Coverage rate of the real estate transactions rate in N-2/N (H12R). 76%



Annex 3

PARTICIPATION INDICATORS 2009

Objectives Objective 2009

2008 (reminder)

Results ObjectivesEffective implementation level for the commitments from the program “Tax Facilitation” of the DGFiP (common to both networks).

90%(PAP 2009)

90.93 % 90 %

Breakdown of the payment rate for tax on individuals. (Income Tax, Residential Tax, Real Estate Tax)

50%(PAP 2009)

50.15 % 49 %

Part of the VAT credit reimbursement requests and the IS refunds, with a favorable or partially favorable decision, within a term not exceeding 30 days.

80%(PAP 2009)

89.52 % 80 %

Contentious claims’ rate in terms of Income Tax and Residential Tax in a one month term.

95.80%(PAP 2009)

96.16 % 94.1 %

Delivery of Real Estate Information within 10 days.1 100 %(BOP 2009)

99.98 % 100 %

Delay rate in the business annual income. < 1 % 0.39 % < 1 %Record of private users who fulfill their income tax obligations. 98 %

(PAP 2009)98.20 % 98 %

Gross collection rate for the taxes filed as of 31/12/N+1. 98.35 %(PAP 2009)

98.52 % 97.9 %

Percentage of controls that punish the most serious frauds. 18 %(PAP 2009)

18.12 % 15 %

Rate of anomalous days on the State accounting records. 25(PAP 2009)

33 35

Coverage scope of the CSCF (Convention on Accounting and Financial Service) 60% 57 % 50 %Rate of increase in automatic payments in the SPL (Local Public Sector) (in amount or number)

5 %5 %

(BOP 2009)

15 % 22 %

+ 5 % + 5 %

1 Theobjectiveisdeemedfulfilledby99.75%.



Communication Policies

1. Introduction.

2. Definition of scope and content.

3. Discussion.

a. The value of communication, engagement and dialogue as part of a compliance strategy.

b. Integrating an approach of education & outreach, service and enforcement.

c. Education and outreach. d. Service. e. Enforcement. f. Using the media to your advantage. g. The benefits of enhanced communication.

4) Conclusions

Policies for Communicating with Society and New Methods for Rendering them More Efficient

Edward Kieswetter South Africa

SUMMARY

The goal of communication for the South African Revenue Service, with its public is in line with its compliance theory. In its most simplified form, the compliance theory, which has three pillars, viz education, service and enforcement, holds that:

• If we reach out and make taxpayers aware of their obligation AND.• If we make it easy for them to fulfill their obligation, THEN• They would be more likely to comply, AND• We would be in a position to assert responsible enforcement

This would then naturally imply that our interaction with the public must address:

• EDUCATION & OUTREACH: Communicating to taxpayers what their various tax obligations are in terms of the law

• TAXPAYER SERVICE: Communicating to taxpayers how they may fulfill these obligations which would include various forms, service channels, dispute resolution mechanisms, etc

• ENFORCEMENT: Communicating to taxpayers how we would detect non-compliant behaviour, such as through audits and investigations, as well as the consequences of non-compliance such as penalties, fines, prosecutions etc

The benefits of effective communication policies are mutual.

For taxpayers it provides clarity, certainty, as well as minimizing the burden of compliance. For the revenue administration, leads to cost efficiency and effectiveness, improved compliance and optimal revenue collection.

Without true two-way engagement, aimed at gaining a shared understanding of the realities that face both the revenue administration and the taxpayer, no communications strategy can be successful.

For communications strategies to be successful, it must one the one hand be broad and general, but since one cannot only follow a “one size fits all” approach, it must also include highly segmented and customized methods based on the peculiarities of taxpayers background, needs, preferences and compliance behavior.

The mass media offers an ideal opportunity to touch a broad spectrum of taxpayers, whilst very specific tailored communications strategies are required for different sectors, segments and taxpayer types, using a range of media and messages.

Effective communications approach not only serves to keep our stakeholders informed, it also alleviates pressures on operations through the reduction of unnecessary queries from taxpayers and their tax practitioners / intermediaries. Ultimately, it allows a tax administration to truly influence taxpayers’ compliance behaviour, through ensuring taxpayers’ buy-in and taxpayers being both willing and able to comply with their obligations.

1. INTRODUCTION

Ensuring that taxpayers know what their obligations are, and how to meet them, are critical elements in any compliance strategy.

The use of traditional communications media has proven to be effective, yet there are a number of more innovative mechanisms that could augment the other more conventional approaches.


28 TAX ADMINISTRATION/SOCIAL ROLEEdward Kieswetter (South Africa)

2. DEFINITION OF SCOPE AND CONTENT

This paper seeks to briefly explore the benefits of an enhanced communication strategy with society, and reflects on relevant considerations and challenges that inform or influence a communications strategy with society.

3. DISCUSSION

a) THE VALUE OF COMMUNICATION, ENGAGEMENT AND DIALOGUE AS PART OF A COMPLIANCE STRATEGY

When punishment rather than dialogue is in the foreground of regulatory encounters, it is basic to human psychology to experience this as confrontational, which will result in resentment and resistance on the part of taxpayers.

Substantive dialogue between revenue administrators and taxpayers contributes to a win-win strategy. The role of communication, dialogue and engagement in shaping compliance in a regulatory environment has formed the basis for a number of recent pieces of research. Some of the more relevant findings include the following observations1:

• Regulations can be easier to apply, monitor, and enforce if they have been developed in a process of dialogue and consultation between the revenue administrator and taxpayers.

• Although co-operative and persuasive strategies are not always appropriate, when they are successful they are superior to punitive sanctions in effectively and efficiently accomplishing longer term compliance.

• A large body of research confirms that non-coercive and informal alternatives are likely to be more effective than coercive law in achieving long term compliance with norms, and coercive law is most effective when it is reserved as a last resort.

• There is significant psychological evidence for a “minimal sufficiency principle” that the less powerful the technique used to secure compliance, the more likely is long term internalization of a desire to comply. Compliance can be secured despite weak sanctions through discourse persuasion and co-operation.

• Co-operative strategies of trust, restorative shaming, and praise are more effective at increasing business compliance with regulation than the application of formal sanctions.

In a South African context we have certainly found the research findings to reflect our own experience.

b) INTEGRATING AN APPROACH OF EDUCATION & OUTREACH, SERVICE AND ENFORCEMENT

Whilst communication to taxpayers is critical, it is equally crucial that the communication not be one-way. Without true two-way engagement, aimed at gaining a shared understanding of the realities that face both the revenue administration and the taxpayer, no communications strategy can be successful.

For any compliance strategy to succeed, a revenue administration needs to understand its taxpayers: What will make compliance difficult for them? What will motivate them to want to comply? What technical changes will compliance mean for their business or manufacturing processes? What financial impacts will compliance have?

1 For a detailed analysis see for example the paper on “Reducing the risk of policy failure: Challenges for regulatory compliance” published by the OECD.


29TAX ADMINISTRATION/SOCIAL ROLE Edward Kieswetter (South Africa)

An adequate level of understanding of a target population is unlikely to be achieved without significant communication, dialogue and engagement with taxpayers and their representatives, which makes these activities critical elements in a compliance strategy.

This could mean that policymaking processes in the future would consist mainly of interactive working methods between the regulators and the regulated.

Our broader communications strategy and policy uses mass media channels (such as television and most widely read publications) to communicate a range of messages, which are complementary. It is also our submission that any mass communications approach should include the following facets:

• SARS will continually make it easier and simpler for honest taxpayers to comply• SARS will not hesitate to act against blatant non-compliance• Details of education channels • Details of submission channels• Details of other interactive outreach and compliance activities

In this regard, our recent 2007 media campaign sought to balance the friendly face of SARS with SARS as a regulator.

c) EDUCATION AND OUTREACH

In a South African context we have committed ourselves to engaging with taxpayers and their representatives proactively and constructively. On a practical level we give effect to this commitment through (for example) the following initiatives:

• Continuous engagement with tax practitioners / intermediaries and their professional bodies, ranging from frequent surveys and polls, to opportunities to comment on new business processes, forms and legislation before implementation.

• Walk-abouts, where we make unannounced visits to businesses, and which allow us to assess compliance attitudes and barriers to compliance first-hand.

Taxpayers’ compliance behaviour is typically dictated by one of three variables:

• Their knowledge of their obligations and how to meet them,• Their willingness to comply, and• Their actual ability to comply with the set obligations.

For a revenue administration’s communications strategy and policy to be effective, it needs to address the entire continuum of these three variables.

In the South African context we have sought to achieve this through the following:

• Knowledge of obligations and how to meet them, which we focus on through:o Making our tax forms and guides available in all 11 of our official languages (with effect from

2008);o Dedicated educational coordinators in regions;o Specific focus initiatives to ensure that focus groups are kept informed about their obligations;o Analysis of frequent errors made in respect of submissions and declarations, which informs the

education platform for taxpayers, and which are communicated to target audiences such as tax practitioners / intermediaries;



• Willingness to comply, which we focus on through the following:o We know that lack of adequate consultation may fail to secure target group support for the

proposed regulation.o We are keenly aware of the impact that high compliance costs have on taxpayers’ willingness

to comply. Increasingly we are seeking to implement an approach to ensure that a regulatory impact assessment is done before implementation of new regulations, specifically through proactive and constructive engagement with affected taxpayers.

o Taxpayers lose confidence in tax administrations if they are required to comply with technical rules that do not appear to relate to any substantive purposed – in our engagements with taxpayers and their representatives we are therefore also increasingly seeking to be more open and transparent about our own realities and the reasons and motivations that drive our business.

• Actual ability to comply with the set obligations, which we specifically focus on through upfront engagement with taxpayers and their representatives, to ensure that we fully understand their ability to comply with obligations. The engagements typically consist of an opportunity to review current developments, to make submissions or propose alternative models, and to provide input aimed at ensuring that the target audience would be able to comply with the obligations set.

d) SERVICE

From a service perspective, we know that taxpayers’ compliance behaviour is similarly typically dictated by one of three variables:

o Their knowledge of their obligations and how to meet them,o Their willingness to comply, ando Their actual ability to comply with the set obligations.

Researchers have found that if taxpayers feel they are treated unfairly by a tax administration, then they will often respond by refusing to comply with regulatory requirements. We are therefore also increasingly seeking to ensure that our communications strategy gives taxpayers the assurance that they are being treated in accordance with a set of pre-defined guidelines or rules, and that they know that they have a recourse to an independent complaints body should they feel that they have been treated unfairly.

Our media campaigns therefore also focus specifically on the fact that our service offerings are very much driven by the desire to build brand loyalty, aimed at ensuring taxpayers’ willingness to comply, and by the desire to ensure that taxpayers are in fact empowered to comply with their obligations, by making it easy to comply, increasing our accessibility, and by reducing both the burden and cost of compliance.

However, we are also keenly aware of the fact that different factors motivate different taxpayers differently, and that the realities that impact on their ability and willingness to comply differ between sectors, segments and taxpayer types. A mass media approach is not sufficient in and of itself, and we therefore seek to communicate with taxpayers and engage with them on a range of different platforms and on the basis of a tailored approach which includes:

• A Large Business Centre (focusing on large listed corporates)• A Small Business Unit (focusing on small businesses)• A Practitioners Unit (focusing on engagement with tax practitioners / intermediaries)• A Taxpayer Outreach & Education Unit



• The creation of a dedicated Employers Unit, focusing on engagement with Employers who act as our Agents.

The intention with the dedicated units is aligned with our Segmentation strategy and to ensure that appropriate two-way dialogue and engagement informs our decisions, and that affected taxpayers understand the rationale behind business decisions, that they feel they have had an opportunity to shape the process, and that they are both willing and able to comply with their obligations.

Purely from a more practical perspective, our assessment shows that whenever notices or updates are sent to our tax practitioners / intermediaries, call volumes to the Call Centre tend to drop substantially soon after – this alone gives us some sense of comfort that our tailored communications provide certainty in the market place. In this way, external communication not only serves to keep our stakeholders informed, it also alleviates pressures on operations.

e) ENFORCEMENT

The third element of our compliance strategy, and a factor that impacts on a taxpayers’ willingness to comply, relates to a taxpayer’s perception of the probabilities of detection of their non-compliance, and the consequences if detected.

In our communications strategy we focus on the message that SARS will continually make it easier and simpler for honest taxpayers to comply, but will not hesitate to act against blatant non-compliance.

We are therefore also increasingly seeking to communicate the consequences of non-compliance, as well as our successes in detecting and addressing non-compliance, through for example the publication of the names of offenders (albeit only once convicted).

f) USING THE MEDIA TO YOUR ADVANTAGE

In 2007 SARS launched extensive changes to its assessment process (including the use of Adobe smart returns, the use of scanning technology to process returns, the ability to capture taxpayers’ returns electronically whilst serving them over a counter at a branch, and a substantial increase in the use of electronic channels.) Any programme as ambitious as this one was bound to encounter challenges.

One of the key elements to our successful implementation was the involvement of the media and ensuring that they were kept informed about developments at SARS.

Whilst the media should certainly retain its independence, their support for our initiatives remains invaluable. In this regard we are increasingly making use of briefing opportunities for the media, where we specifically seek to sketch the context within which certain developments happen.

Given the correct context, we believe the media should then in a position to comment on the challenges we face more objectively.

g) THE BENEFITS OF ENHANCED COMMUNICATION

Whilst the benefits of an enhanced communications strategy and policy with society are somewhat self-evident, they do perhaps warrant a specific mention.

• A clear communications policy and approach allows a revenue administration to give effect to its compliance strategy, and to truly influence taxpayers’ compliance behaviour, through ensuring



taxpayers’ buy-in and taxpayers being both willing and able to comply with their obligations. • It results in fewer errors made by taxpayers and their tax practitioners / intermediaries, which in turn

means less administrative intervention required on the part of the tax administration. • It also means that more costly and confrontational enforcement activities can be held over for the

more severe cases of intentional non-compliance. • Furthermore, upfront engagement and dialogue ensures that business processes that are

implemented are perhaps more pragmatic and sensible, with taxpayers being able to comply, which ultimately results in less friction and less rework later in the process.

• External communication not only serves to keep our stakeholders informed, it also alleviates pressures on operations through the reduction of unnecessary queries from taxpayers and their tax practitioners / intermediaries.

• Effective communication is key to bringing a level certainty to taxpayers, and has a positive effect on the compliance culture, and consequent level of compliance.

4. CONCLUSIONS

A wide-ranging communications approach not only serves to keep our stakeholders informed, it also alleviates pressures on operations through the reduction of unnecessary queries from taxpayers and their tax practitioners / intermediaries. Ultimately, it allows a tax administration to truly influence taxpayers’ compliance behaviour, through ensuring taxpayers’ buy-in and taxpayers being both willing and able to comply with their obligations.



I. Introduction.

II. Core axes of an efficient communication policy.

1. Informing taxpayers of their rights and obligations and supporting them in the compliance thereof.

2. Developing in citizens (taxpayers) a greater perception of equity and justice in the tax system.

3. Collaborating to deter tax evasion and tax fraud.

4. Contributing to a greater “tax education” and developing a “compliance culture” in citizens.

III. Portuguese tax administration communication policy.

1. Taxpayers’ access to tax status information and assistance in the compliance with tax obligations.

2. Developing in citizens (taxpayers) a greater perception of equity and justice in the tax system.

3. Deter tax evasion and tax fraud.

4. Contributing to a greater “tax education” and developing a “compliance culture” in citizens.

5. Certain indices on the performance of the Portuguese tax administration in the last few years.

IV. Conclusions

Policies for Communicating with Society and New Methods for Rendering them More Efficient

José Antonio de Azevedo PereiraPortugal

SUMMARY

The communication policy adopted by the Tax Administrations is increasingly considered an issue of great relevance in any strategy geared at increasing taxpayer’s voluntary compliance.

The adoption of an effective communication policy is fundamental to achieve taxpayers’ greater acceptance and understanding of the Tax Administration mission and, consequently, a greater trend towards compliance with tax obligations.

Maximizing the levels of voluntary compliance is only possible if we adequately inform taxpayers about their obligations and rights and on the form of meeting and exerting them. On the other hand, the better knowledge of the Tax Administration’s activity and the outcomes thereof is also a significant factor to induce compliance and, on the other hand, deter tax evasion and tax fraud.

Thus, communication plays a relevant role in determining taxpayers’ behavior. Therefore, in the current “information society” the challenge faced by the Tax Administrations is to use effectively the new potentials created by such society, favoring a greater approach to taxpayers and inducing higher levels of voluntary compliance with tax obligations.

An efficient communication policy comprises four fundamental aspects:

i) To ensure that taxpayers know their rights and obligations, enjoy fast and simple access to the information on their tax status and receive the support required to meet their tax obligations on an appropriate and timely basis;

ii) To provide citizens (taxpayers) information on the activity that the Tax Administration performs and the results obtained for them to develop a greater and better perception of equity and justice of the tax system;

iii) To develop the perception of risk and the costs related to noncompliance, by way of the dissemination of the outcomes achieved by the Tax Administration in the area of control actions –automated and based on inspections (type of actions conducted, tax assessed, interest assessed, punitive interest application, criminal prosecution);

iv) To engage actively in the tax education of citizens, creating awareness on the relevance of taxes in the Rule of Law and the Social State, specifically investing on the youngest sectors of the population. It is very important to foster conditions for the young to develop a greater civic and tax awareness that will prevail in their adulthood and makes them more cooperative citizens, compliant with tax obligations.

I. INTRODUCTION

The communication policy adopted by the Tax Administrations is increasingly deemed a topic of great relevance in any strategy aimed at improving taxpayer’s voluntary compliance.

As we know, tax collection is not a popular task, especially among citizens, therefore, the adoption of an effective communication policy is vital for taxpayers’ better acceptance and understanding of the Tax Administration’s mission, and consequently, a greater predisposition towards compliance with tax obligations.

The form in which the Administration relates to its subjects, taxpayers, is vital for their perception of the tax system and the respective behavior, and the communication policy is, naturally, an essential factor in this relation.


35TAX ADMINISTRATION/SOCIAL ROLE José A. de Azevedo P. (Portugal)

Maximizing voluntary compliance levels is only possible if taxpayers receive adequate information on their obligations and rights and on the form of complying and exerting them. On the other hand, knowing the Tax Administrations activity and the results thereof is also a relevant factor to induce compliance and, inversely, deter tax evasion and tax fraud.

An efficient communication policy plays a vital role in taxpayers’ behavior. In the current “information society”, the challenges facing the Tax Administrations is to effectively use the new potential created by such society, favoring a greater approach to taxpayers and inducing higher levels of voluntary compliance with tax obligations.

II. CORE AXES OF AN EFFICIENT COMMUNICATION POLICY

In my view, an efficient communication policy shall fundamentally consider four aspects:

Informing taxpayers of their rights and obligations and supporting them in the compliance thereof; Developing in citizens (taxpayers) a greater perception of equity and justice in the tax system; Collaborating to deter tax evasion and tax fraud; Contributing to a greater “tax education” and developing a “compliance culture” in citizens.

Following I shall briefly refer to how each of these four axes translates.

1. INFORMING TAXPAYERS OF THEIR RIGHTS AND OBLIGATIONS AND SUPPORTING THEM IN THE COMPLIANCE THEREOF

The first axis – taxpayer information and support- is, naturally, fundamental for the voluntary compliance indices.

If taxpayers do not know or understand the rules that govern them, they shall face greater difficulties to meet their tax obligations, even if initially there is a predisposition towards compliance.

Therefore, it is the role of the Tax Administration to ensure taxpayers the fast and simple access to information on their tax status and assist them in complying with their tax obligations.

In this axis of communication, the Tax Administration shall make available to taxpayers multiple access channels - Internet, e-mail, personal assistance, telephone assistance, fax or mail – considering the different needs and diverse taxpayer profiles.

Regardless of the diversity of channels through which interaction with the Tax Administration is possible, Internet shall be the priority for taxpayers to access information, whether of a general or specific nature; that is to say, the one referred to the specific taxpayer status. The growing reliance on the Internet is fully warranted by the fact that it is the interaction channel that guarantees lower costs, for the administration as well as taxpayers (mostly in terms of convenience, availability and expeditiousness).

On the other hand, the Tax Administration shall increasingly adopt a proactive attitude, informing taxpayers on the deadlines of their tax obligations, disseminating the new services available (for example, new online services) or informing them of the legislative amendments and their respective consequences. Therefore, the E-mail and SMS tools appear as the most appropriate means of communication, given their advantages in terms of fast communication and taxpayers’ perception that they are easily accessible.


36 TAX ADMINISTRATION/SOCIAL ROLEJosé A. de Azevedo P. (Portugal)

Corporate TV is also another medium that the Tax Administrations may employ to carry relevant information to taxpayers, whether in the axis under consideration or the axes I shall refer to later. The availability of this communication channel in the personalized assistance offices to disseminate the useful contents for taxpayers and for the Tax Administration proper constitutes another means to increase the efficiency in the communication with citizens.

Lastly, the Tax Administration shall also rely on diagnosis instruments that enable to assess the quality of assistance and the services it renders taxpayers by regularly conducting surveys/questionnaires that allow to measure the levels of taxpayer satisfaction and identify improvement and services’ expansion opportunities.

2. DEVELOPING IN CITIZENS (TAXPAYERS) A GREATER PERCEPTION OF EQUITY AND JUSTICE IN THE TAX SYSTEM

The dissemination of easily accessible information for citizens relative to the resources allocated to the Tax Administration, the activities and actions developed and the results achieved, apart from contributing to a greater transparency of the Tax Administration and enabling to evaluate the respective performance, is also a key factor for citizens to develop a greater perception of equity and justice in the tax system.

For example, in this context, I understand the great relevance of disseminating data regarding the taxpayers’ control and selection mechanisms and the respective results and average collection terms, specifically, coercive collection

As regards the communication media to be employed in disseminating the Tax Administration activity, actions and results, the Internet and Corporate TV appear as the most appropriate internal channels.

On the other hand, it is an axis of great importance with respect to the mass media (for example, newspapers, magazines, radio and television), given the broad coverage they ensure.

3. COLLABORATING TO DETER TAX EVASION AND TAX FRAUD

The perception that tax noncompliance entails risks and high costs is a key factor to deter tax fraud and tax evasion, and thus, it is vital that the Tax Administration’s communication policy contributes in the development of such perception.

In this regard, the Tax Administration shall inform citizens the measures and actions implemented with the purpose of detecting and combating tax evasion and tax fraud and disclosing the achievements.

In this case, resorting to the mass media, in addition to the Internet and Corporate TV channel constitutes a key factor for this axis of communication, since they enable reaching the majority of citizens/taxpayers.

4. CONTRIBUTING TO A GREATER “TAX EDUCATION” AND DEVELOPING A “COMPLIANCE CULTURE” IN CITIZENS

Last, but not least, it is worth noting the Administration’s communication policy contribution to “tax education”- for the development of a “compliance culture”.

We know that citizens do not appreciate paying taxes, in general terms. Therefore, I believe that a



greater awareness as regards the relevance of taxes in the Rule of Law and the Social State and more information on the form in which the taxes we pay are employed, are key factors to develop in citizens a greater predisposition towards the payment of taxes; that is to say, to generate in citizens the “compliance culture”.

Likewise, in this area, the Tax Administrations may and shall play a relevant role, since in this case, and in spite of the wish that the actions undertaken reach the largest number of citizens, children and youths are the most relevant beneficiaries, since they are the taxpayers of the future.

As regards the education axis in the communication policy, the means that the Tax Administrations may employ are quite different. For example, the participation in the creation of school curricula that incorporates tax education subjects, the development of educational publications and games, inclusion of a tax education area on Web sites, implementing and participating in fora on the topic, etc.

III. PORTUGUESE TAX ADMINISTRATION COMMUNICATION POLICY

Following, I shall focus on certain aspects of the Portuguese Tax Administration communication policy – of the General Tax Directorate (DGCI, as per the Portuguese acronym) – in the different axes mentioned.

1. TAXPAYERS’ ACCESS TO TAX STATUS INFORMATION AND ASSISTANCE IN THE COMPLIANCE WITH TAX OBLIGATIONS

Taxpayers’ right to be informed on the appropriate construal of tax regulations, in general, and their tax status, in particular, is embodied in the Portuguese tax legislation. The DGCI makes available multiple channels aimed at ensuring taxpayers’ access to the relevant information for the appropriate compliance, in due time and manner, of their tax obligations.

In spite of the diversity of existing channels (personal, telephone, e-mail and fax/mail), the Internet increasingly stands as the strategic channel for the Portuguese Tax Administration, whether for the purpose of disseminating general or specific information.

As regards the general information available on the Web site, we may highlight all the tax legislation in effect; a section for FAQs (Frequently Asked Questions) relative to the different taxes and other tax issues; publication of the Administration’s opinion as regards relevant information requested by taxpayers; the administrative instructions published by the services (such as, circulars, communications); the tax calendar, with the deadlines for taxpayers’ tax obligations; and programs with sample tax assessments.

As regards the specific information, the Internet features a set of relevant data on taxpayers’ tax status. For example, taxpayers may access (i) registry information and directly modify it; (ii) queries on the status of their tax statements; (iii) queries on tax debts and, simultaneously, request information and clarification in such respect or even proceed to their payment; (iv) queries on infringement proceedings.

Currently, taxpayers may file almost all the tax statements via the Internet. Internet-based filing is mandatory for corporations and individuals that perform professional or business activities. The Portuguese Tax Administration relies on the Internet and this has spurred in the last few years a significant growth in the adhesion by taxpayers to this channel for the compliance with their tax obligations, including those who are not mandated to file via the Internet.

The following chart illustrates the evolution of Internet-based tax statements by individuals and shows the significant growth of tax statements filed according to this modality in the last few years.



2003 * 2004 2005 2006 2007

306,935 441,961 782,566 1,138,737 1,707,205

229,560 507,802 950,806 1,138,517 1,225,668

536,495 949,763 1,733,372 2,277,254 2,932,873 * Accrued Value

IIT – Phase 1

IIT - Phase 2

Total

Internet –Tax Statements Filed by Individuals

>_

In 2007, the IIT (Individual Income Tax) statements filed via the Internet for the first time exceeded the number of statements filed on paper, with 60% of taxpayers filing their statements electronically (52% in Phase 1 – comprising taxpayers who only earn income from employment and pensions, who are not mandated to file their tax statements electronically; and 72% in Phase 2, comprising taxpayers who earn a different type of income).

One of the key factors that spurred the significant growth of the individual tax statements filed via the Internet recorded in 2007 was the implementation of the pre-completion system for tax statements.

This system is only available for the statements filed via the Internet. In the year 2007 (when the implementation was launched), the pre-completion system covered the income from employment and pensions, and the withholdings on such income.

In 2008, the pre-completion initiative was significantly expanded to include the following amounts: Mandatory social security contributions;Union contributions;Withholdings on professional and business income and identification of the withholding agencies; Advance payments made in the area of the professional and business activities;Capital gains subject to mandatory taxes and withholdings;Withholdings on equity increases;Exempted income subject to taxation and withholdings;

In addition to relying on the Internet channel, the Portuguese Tax Administration has prioritized e-mail, to not only answer the requests for clarification filed by taxpayers, but also as the preferred tool to forward communications, messages and announcements.

In fact, the e-mail channel is increasingly employed to forward informative messages on the new Internet services available and the form of accessing them, as well as to send announcements to taxpayers, with relation to the deadlines to meet tax obligations, along with the information on how to meet such obligations.

By issuing such announcements/alerts, we intend to assist taxpayers in the compliance with their tax obligations in due time and manner, while we come closer to them and reduce the costs tied to compliance with such obligations.

In the short term, we also intend to employ SMS Messages in order to issue alerts and announcements to taxpayers when possible.



In the future and in the framework of the implementation in the Finance Services of an Assistance Management System in an IT application that enables the dissemination of content via a Corporate TV system, the DGCI intends to develop and make such potential more dynamic by the production of informative content of interest for taxpayers.

Along with the availability of multiple access channels, the DGCI annually performs diagnosis with the purpose of evaluating services and levels of customer satisfaction (taxpayers).

The methodology employed consists in, fundamentally, conducting questionnaires and personal interviews for the different types of users and seeks to evaluate:

• The functionalities, services and access channels most widely used with regards to the Tax Administration;

• The levels of satisfaction of different types of users in their relation with the Tax Administration;• The key difficulties perceived in such relation;• Improvement suggestions.

The results of the questionnaires are posted on the Internet and the mass media, specifically newspapers.

2. DEVELOPING IN CITIZENS (TAXPAYERS) A GREATER PERCEPTION OF EQUITY AND JUSTICE IN THE TAX SYSTEM

In the axis of taxpayers’ greater perception of the tax system equity and justice, it is vital for taxpayers to enjoy simple and easy access to the information on the activities conducted by the Tax Administration and the performance results.

In the case of the Portuguese Tax Administration, traditionally, the availability of such information has been based on the public dissemination of the Annual Plans and Activities’ Reports.

In the last few years, the Portuguese Tax Administration has become increasingly aware that citizens’ knowledge of its activity and results bears a positive impact. Consequently, it has decided not only to make the information rendered at this level broader, but also the diversification of the means employed for such purpose, especially taking advantage of the potential in the new technologies introduced as regards communication.

Therefore, in addition to posting on the Internet the foregoing documents (plans and activities’ reports), we regularly make available statistical data relative to the revenue collected from the different taxes, whether the one arising from the amounts filed voluntarily by taxpayers or from tax inspections (adjustments on the amounts filed by taxpayers).

The implementation of new automated control and information crossing mechanisms and the respective outcomes are also disseminated, and the same applies to the actions performed by the inspection services. The results are disclosed as aggregate figures, which protects the confidentiality thereof.

In this axis, the most broadly used communication tools are the Tax Administration Web site (a priority channel for this purpose as well), presentations to specialized entities, mass media (especially, newspapers) and the DGCI quarterly publication.



3. DETER TAX EVASION AND TAX FRAUD

Another axis of the efficient communication policy shall be, as mentioned above, effects that deter tax evasion and tax fraud, arising from an increased risk perception and the costs tied to noncompliance.

In this regards, and in line with the foregoing axis, it is vital that taxpayers access the information that enables them to evaluate the efficacy of the actions undertaken by the Tax Administration in combating tax noncompliance. Taxpayers shall perceive that there is an effective action against noncompliance and that the Tax Administration demands noncompliant taxpayers to amend their situation, with a significant cost increase.

In order to reach this purpose, the Portuguese Tax Administration has disseminated, systematically and recurrently, the control actions, automated and inspections, and the respective results, such as the number of debtors and irregular situations detected, the tax and interest amount assessed, the punitive interest applied, the number of cases under criminal prosecution, etc.

The tools employed in the dissemination of this type of results are, fundamentally, the Tax Administration Web site and the mass media.

Even in this axis, since 2006, the Tax Administration has been disseminating via the Internet a list of the delinquent taxpayers, which may be accessed by the public.

Disclosing this list is chiefly aimed at inducing taxpayers who hold tax debts to amend their situation voluntarily and thus avoid being included on such list.

This measure has produced a positive effect, since a very large number of taxpayers paid their tax debts.

4. CONTRIBUTING TO A GREATER “TAX EDUCATION” AND DEVELOPING A “COMPLIANCE CULTURE” IN CITIZENS

In the area of tax education, I shall focus on two recent experiences of the Portuguese Tax Administration.

Tax Education Project

Traditionally - except for certain initiatives in the implementation of tax reforms- the tax education axis has been largely absent from the Portuguese Tax Administration’s communication policy.

This situation has been recently modified, when we launched in June of 2006, a tax education project, whose main purpose was and still is, the promotion of greater civic-tax awareness in citizens, in general, and youths, in particular.

The greater focus on the younger segments of the population is justified in the face of the significant role they play in economically developed societies, whether in terms of income (consumption of goods and services) or in terms of government spending (education and health). Thus, it is deemed relevant that they develop and internalize a civic-tax awareness that will prevail in their adulthood and makes them cooperative citizens, compliant with tax obligations.



The initiatives already undertaken in the sphere of this project shall be fundamentally materialized by:

The development and execution of a traveling Exhibition; The design and execution of a game and three books that shall be distributed mostly during the

Exhibition.

Thirty panels divided, chiefly, into five chapters make up the Exhibition:

I) History and life of taxes, with a brief overview of the History of Taxes in Portugal (When?);II) Why meet tax obligations, based on ethical and civic values and, ultimately, personal and social

honesty. (Why?);III) A brief overview of the Portuguese tax system, highlighting the main taxes under the administration

of the General Tax Directorate (Which ones?);IV) Forms of obtaining revenue, the State Budget, the relevance of taxes to counter deficit, the Tax

Administration (How?);V) Allocation of government funds, that is to say, why tax money is vital and how it is employed. (What

for?).

The exhibition opened on the premises of the Ministry of Finance in Lisbon and visited other locations thereafter, such as the University of Law of Lisbon and the University of Economy of Coimbra. Currently, it is visiting the city of Porto, in the Office of the President of the University of Porto and shall move onto other cities since its purpose is to tour the whole country.

To date, a very large number of citizens have attended the Exhibition, in particular high school students.

As mentioned before, and in addition to the traveling exhibition, we created a didactic game and two comic books and a more technical book with a brief description of the Portuguese Tax System.

The DGCI plans to continue with the tax education project, promoting other initiatives in the area, such as, the incorporation on its Web site of a specific area on tax education aimed at students, parents and professors.

“Request your Invoice” Campaign

Although it has not been included in the sphere of the tax education project, the General Tax Directorate launched an advertising campaign by the name of “Request your Invoice”, aimed at creating awareness in citizens with respect to the importance of the act of demanding the invoice as regards voluntary compliance with tax obligations.

This campaign was geared at informing citizens with about the role they may play in promoting tax equity and justice, if they adopt behaviors that lead to the economic agents’ greater compliance overall, in this case, by always demanding an invoice when they purchase goods and services. In this regard, the “Request your Invoice” campaign is also in line with tax education initiative.

The campaign was launched in March of 2007 and covered the different mass media, specifically television, for a 2-month term.

At the same time, we designed signs and posters placed in different DGCI buildings and services.



5. CERTAIN INDICES ON THE PERFORMANCE OF THE PORTUGUESE TAX ADMINISTRATION IN THE LAST FEW YEARS

In the last few years, we have experienced a significant growth in the levels of voluntary compliance, fundamentally based on a faster and more effective action against tax evasion and tax fraud. This has been based either on the introduction of automated mechanisms that enabled to conduct mass controls via information crossing actions, or by the effort of the tax inspection, granting it more and better means to combat tax fraud and tax evasion, or even, by making the cooperation with other entities with inspection powers more dynamic.

In fact, the greater focus of the Portuguese Tax Administration on communication has also contributed to the increase in the levels of voluntary compliance, specifically, as refers to the dissemination of the results of their actions, as a form of inducing a greater risk perception, and consequently, a greater predisposition to compliance (always tied to the concern for facilitating compliance, by simplifying tax obligations and disseminating the information and assisting taxpayers with regards to tax obligations’ compliance).

For illustration purposes, we present a number of efficiency indices of the Portuguese Tax Administration performance.

The following chart shows the evolution of the revenue collected by the DGCI and the Gross Domestic Product (GDP) at nominal values in the period between 2004 and 2007.

We may observe that the weight of revenue on the nominal GDP has successively increased and that, in accrued terms, the revenue collected by the DGCI increased by 24.5% in the period under study, while the nominal GDP growth was close to 12.8%.

The difference between both growth rates is chiefly based on the improved tax efficiency in the period under study, as we may observe in the following chart, which presents the tax efficiency values for the years under study, determined by the difference of the nominal GDP growth rate and the revenue growth rate net of refunds and corrected for extraordinary effects.

2004 2005 2006 2007*

32,278.2 34,091.1 36,639.3 40,187.1

144,128.0 148,851.7 155,131.1 162,509.5

22.4% 22.9% 23.6% 24.7%

* Preliminary

Overall revenue collected by the DGCI (TR)

Nominal GDP

TR in % of GDP

Gross Revenue collected by the DGCI in % of the GDP(Million Euros)

2004 2005 2006 2007*

3.6 3.1 3.3 5.3

* Preliminary

DGCI Tax Efficiency(Percentage points)

Tax Efficiency



An identical conclusion may be drawn from the analysis of the evolution of the State’s net revenue collected by the DGCI (including income from municipal taxes), as illustrated on the following chart.

IV. CONCLUSIONS

The low popularity of the tax collection task makes the adoption of efficient communication policies one of the key factors to increase taxpayers’ levels of compliance with tax obligations. If taxpayers are appropriately informed of their rights and obligations, and even the Tax Administration’s activity and the respective outcomes, a greater trend towards compliance shall be achieved.

An efficient communication policy shall fundamentally span four axes: (i) informing taxpayers, on a simple and expeditious basis, about their rights and obligations and assisting them in the compliance thereof; (ii) creating in citizens (taxpayers) a greater perception of equity and justice of the tax system; (iii) contributing to deter tax evasion and tax fraud; (iv) contributing to a greater “tax education” and the development of a “compliance culture”.

The challenge faced by the Tax Administrations is to use effectively the available communication media, specifically those arising from the new technologies, in order to achieve success in the four axes of the communication policy, adopting solutions that bring them closer to taxpayers, facilitating and improving their relation with the Administration.

2004 2005 ? % 2006 ? % 2007** ? %

11,307.9 11,519.2 1.9% 12,617.2 9.5% 14,778,2 17.1%

10,756.8 12,206.7 13.5% 12,954.0 6.1% 13,654.9 5.4%

569.9 508.2 -10.8% 540.1 6.3% 621.7 15.1%

22,634.6 24,234.1 7.1% 26,111.3 7.7% 29,054.8 11.3%

**Preliminary* Net Revenue = Gross Revenue - Refunds - Transfers

Total

(Million Euros)

Net Revenue * of the State administrated by the DGCI

Direct Taxes

Indirect Taxes

Other



Tax Education

1. Context

2. Approach and scopes

3. Reasons for compliance

4. Why promote a tax culture?

5. Law, morality and culture

6. Perceptions and attitudes

7. Adoption of strategies

7.1 Objective and scope 7.2 Stakeholders 7.3Beneficiaries 7.4 Scopes and messages 7.5 Education as the pillar 7.6 Conditions of the strategy and its complementarity

8. About the experience of Guatemala

8.1. Actions of the permanent tax culture program 8.2. Inter-relations 8.3. Strategy principles and features 8.4. The local environment and reciprocity 8.5. Insight and exploring

9. Conclusions

Strategies to Develop a Tax Culture

Carolina RocaGuatemala

Summary

In the last three years, the Superintendency of Tax Administration (SAT) of Guatemala has been conducting an integral program to develop the tax culture; the experiences and lessons learned are mentioned at the end of this document and have served as its basis.

TheimplementationofsaidprogramhasalsoleadSATtoreflectuponthetopicofthetaxcultureandestablish contacts with entities that shall work in this area, as well as with other Tax Administrations of Ibero-America that undertake similar initiatives, which has contributed to enhance their knowledge on theissueandhasbeenalsofundamentaltoadequatelysupportasignificantpartofthemethodologicalcriteria, notions and aspects set forth herein.

Based on the analysis of the context, the document approaches the focus and scopes of the strategies geared at the development of the tax culture, considering four essential themes for the purposes of this presentation: i) the reasons for tax compliance; ii) the importance of promoting the tax culture; iii) the relevance of the law, ethics and culture in this issue as the three main controllers of human behavior; andiv)thereasonwhytheactionstopromoteculturalchangesareultimatelyaimedatthemodificationofperceptions,attitudes,behaviorsand,chiefly,values.

The adoption of any strategy implies answering the basic questions of what, who, what for, where, how and when; thus, we shall analyze hereunder the features of the strategies to promote the tax culture in aspectssuchas:objectivesandscopes,keyplayers,beneficiaries,contentsandtools.

Nevertheless, there is consensus on the fact that “there are no recipes” for the adoption of this type of strategies,since,ultimately,thespecificitiesofeachcountryandthetoolsofeachTaxAdministrationdetermine the class and magnitude of its intervention on the matter.

Lastly, for illustration purposes, we address the case of Guatemala, describing its main features and prevailing conditions, as well as the options chosen, the lessons learned and the directions followed.

Overall, we wish to share with the participants of the 42nd CIAT General Assembly, the standpoint of a Tax Administration that considers the promotion of the tax culture as part of its core functions and a relevant component of the taxation, citizen development and legality culture areas.

1. Context

There is an increasing interest in the Tax Administrations over the development of the tax culture, that is, over the adoption of strategies that enable to create awareness in their countries on the relevance of meeting obligations as regards internal and customs revenue, but from an educational approach that is not exclusively centered on the taxpaying population, but rather on non-taxpayers, from children to youths to adults excluded from the effective taxpayers’ base, whether because they have no direct legal tax obligations or because they conduct their activities in the informal market.

If we conceive the culture as a set of knowledge, lifestyles and habits of a given society, or else, as the set of expressions of the traditional form of life of a people,1 we would understand by tax culture the set of information and the degree of tax knowledge in a given country, but moreover, the set of perceptions, criteria, habits, and attitudes of society with regards to taxation.

1 Dictionary of the Royal Academy of Spanish, Twenty-second Edition, 2001.


46 TAX ADMINISTRATION/SOCIAL ROLECarolina Roca (Guatemala)

Thus, in the case of the majority of Latin American countries –Guatemala among them- we could assert that the social behavior prevailing has been against the payment of taxes, which is evidenced in rejection, reluctance and evasion, that is to say, different forms of noncompliance.

Frequently, such behaviors seek to justify themselves by disqualifying the performance of the public administration,whetheronthebasisofcorruption,inefficiencyorlackoftransparencyinthemanagementof resources, or ideological arguments on the economy, society and the role of the State.

In general terms, such is the context in which the Tax Administrations of a majority of Latin American countries have to undertake their tax education functions. Nevertheless and from a positive standpoint, we find fertile ground to sow and reap the ethical and citizen coexistence values that provide thegroundwork and social legitimacy to taxation and compliance with tax obligations as a country’s need in order for the State to promote economic, social and political development, as part of its mission.

This outlook enables to view the broadness of the social and cultural sphere open to the initiatives to promote the tax culture and sets forth, from its origin, the need to establish priorities, select target groups,definegoalsandapproachmodesconsistentwiththeTaxAdministration’sinstitutionalstrategyand the available resources to such end.

Thus, it refers to the adoption of a strategy that may not be partial or temporal, but substantial, permanent and incorporated in the inherent forms of being and doing in the institution, that is to say, integrated to the daily activities of its basic functions, but with a long-term vision that shall be applied within as well as outside the Tax Administration (TA).

The coverage and scope of the strategy may be as broad or narrow as the institution decides. In any case, it requires depth of actions, no matter how limited, since the changes in structures and behaviors are not produced overnight: they entail deep transformations in the ideas of individuals and groups, which leads them to act differently, or as in the case of children and youths, assume a mature and responsible civic identity, fully aware of their rights and obligations in the society were they live.

2. Approach and scopes

How can the tax culture be promoted in a country that lacks it? What are the steps to follow? Who shall assume responsibility? What actions should be undertaken to change the values and attitudes that have opposed taxation in the course of history? How may rejection and resistance be overcome?

Answering such questions is no easy task, but it is worth the effort of shedding light on such topic based onthespecificexperienceinthefieldofdevelopmentofthetaxcultureinacountrythatfeaturesoneofthe lowest tax burdens in Latin America and whose social indicators are also featured among the less favorable in the continent: Guatemala. We shall address it at the end of this document.

In order to strengthen the tax culture (understood as the set of values, beliefs and attitudes shared by a society regarding taxation and tax laws), it is necessary for individuals to be informed and duly aware of the issue, but above all, that they understand the relevance of their tax responsibilities. Since the development of the tax culture goes beyond the mere sphere of the taxpayer population for its essential relation to the promotion of responsible citizens that exercise their rights and meet their obligations, two reciprocally legitimating dimensions.2

2 Rufail, Sergio (Deputy Director General of Taxpayer Service of the Federal Revenue Administration of Argentina, AFIP): Conclusions of the International Civic-Tax Education Seminar. Buenos Aires, Argentina, October 6-10 of 2007.


47TAX ADMINISTRATION/SOCIAL ROLE Carolina Roca (Guatemala)

Thus, the development of the tax culture shall be deemed a systematic and permanent effort based on principles, focused on the promotion of civic values and, therefore, aimed at current taxpayers as well as the citizens of the future –children and youths-, whose culture and vision of the world are under development, and makes them more susceptible of internalizing and adopting the values that shall determine their social behavior in the future. As asserted by Eurosocial, only the free, informed and self-governed citizens, aware of their rights and obligations, shall be honest taxpayers.3

One of the main conclusions of the International Civic-Tax Education Seminar held in Buenos Aires in October 2007 is that all the countries represented therein agreed on highlighting the relevance of Tax Education as the basis to constitute a democratic citizenry, asserting that it constitutes education in values to conform a new tax culture.4

Civic values of respect, integrity, cooperation and solidarity, among others, arise from social processes as well as individual acceptance in which, by different means, citizens become convinced that it is more usefulandefficienttoadoptthemintheirbehavior,tothedetrimentofothersthatfosterdisrespect,transgression, dishonesty and lack of solidarity.

Therefore,asdefinedbytheSpanishIEF,taxeducationshallbecomeatopicto:i)identifythedifferentpublic assets and services; ii) learn their economic value and social relevance; iii) acknowledge their sourceoffinancing,especiallytaxsources;iv)establishtherightsanddutiesthatarisefromthepublicsupply of goods and services; v) internalize the attitudes of respect for what is public and, therefore, financedwitheveryone’seffortandemployedforthecommongood;vi)internalizethetaxresponsibilityas one of the underlying values of social coexistence in a democratic culture, identifying compliance with tax obligations as a civic duty; and vii) understand that taxation, with its two aspects - revenue and government expenditure-, is one of the areas in which values such as equity, justice and solidarity in a democratic society are materialized.

Thedevelopmentofagenuinetaxawareness–andfiscalingeneral-consistsinassumingthatabovethespecifictaxmodels,ever-evolvingasexpectable ineverydynamicsociety, thereareaseriesofunderlyingcriteriainthecooperativefinancingofthepublicandcommonneeds.Themaincriterionisthat of citizenship, which implies assuming the social responsibilities as a necessary counterpart to the exercise of civic rights.5

The foregoing places the development of the tax culture under a framework of action that greatly exceeds immediacy, since it is mostly aimed at middle and long-term objectives.6 This differentiates it from other Tax Administration actions, generally centered on short-term results as well as from the Tax Administrations’ assessment criterion to measure the impact of its actions, since the long-term condition mentioned above requires closer assessment of the sociological variables rather than the economic ones.

3 Eurosocial, Taxation Sector: Virtual Civic-Tax Education Forum, November 28th – December 11th of 2007 (www.eurosocialfiscal.org).4 Goenaga, María (Tax Sociology Department of the Institute for Fiscal Studies of Spain, (IEF, as per the Spanish acronym): Conclusions of

the International Seminar on Civic-Tax Education. Buenos Aires, Argentina, October 6-10 of 2007.5 Institute for Fiscal Studies, IEF: Tax Education in Spain, 2005. By María Luisa Delgado Lobo, Marta Fernández-Cuartero Paramio,

Ascensión Maldonado García-Verdugo, Concha Roldán Muñío and María Luisa Valdenebro García.6 Comment by Sergio Rufail (AFIP, Argentina) in the Virtual Civic-Tax Education Forum: “Succeeding in cultural changes requires the same

time as the one required to implement them. Maybe we may identify short-term results, but they shall be tied to the degree of acceptance of the initiatives rather than the concrete changes, achieved and internalized by students or citizens. Tax Education is a long-term vision.”



3. Reasons for compliance

For a State to be able to meet its objectives of protecting the common good and providing citizens the basic public services they require, it needs resources that are mainly produced by the taxes paid by citizens.

Thepaymentoftaxesisthespecificexpressionofcompliancewithregulations.Itentailsabidancebythe law in effect, whether by subjection or will. In other words, it expresses an attitude that is determined by coercion or else by the individual conviction in a social function. Coercive force is expressed by laws, their mandatory compliance and, eventually, the sanction or punishment for noncompliance therewith, while conviction is based only on a strongly rooted tax culture.

They are not two self-excluding notions –according to Argentine authors Etkin and Estévez-, since the legal framework and the obligation to comply therewith are always present and articulated in the concept and practice of the prevailing order7, to the extent the taxpayer’s motivation does not arise from the mandatory nature and the fear of sanctions, but from a personal conviction that relates to the will to meet the civic responsibility of contributing to the support of the State.

The tax event is a twofold act between the taxpayer and the State, in which the latter assumes a double function: collecting taxes and returning them to society in the form of assets and public services. It is a regulated social process, in which tax compliance responds to a legal mandate that the taxpayer shall obey and the authority must enforce according to the powers vested by law.

The foregoing underlines the fact that the payment of taxes responds, above all, to a legal mandate. Thus, the source that legitimates the performance of the Tax Administration is, fundamentally, the law, and therefore, the exercise of the authority arising therefrom. Therefore, citizens’ tax awareness may be strengthened by applying the strictest control mechanisms, provided that the State evidences an honestandefficientadministration.8

Regardless of the fact that society is governed by a democratic system or otherwise, compliance with tax obligationsrespondstoalegalorder,formedbynorms,termsandspecificsanctions,whichempowerthe tax authority to collect taxes and act against those who fail to meet the payment obligation.

Nevertheless, the scope of action of the TA exceeds the mere collection of taxes, just like the working area of the public health system, for example, exceeds the mere assistance in case of illness. Just like child nutrition is basis for any public health system, the Tax Administration shall conceive civic-tax education as part of its core functions. This is something that is not so evident for many Tax Administrations.Someconsider taxeducationassomethingsuperfluous,or, in thebestofcases,an accessory or ancillary instrument to their core processes, without taking into account that the development of the tax culture represents, in the long term, one of the most solid and reliable bases underlying the collection process.

7 Etkin, Jorge and Estévez, Alejandro: Tax Environment and Tax Education Strategies. AFIP Institute, Argentina.8 Montúfar, Rodrigo: Modern Tax Law Trends, page 57. Guatemala, 2000.



4. Why promote a tax culture?

The taxcomplianceobligationestablishedbya legitimateauthorityand in linewithaspecific legalsystem,maybesufficienttoachievethetaxcollectionobjectives,dependingontaxpayers’perceptionof risk and the TA’s capacity to audit and enforce sanctions. Nevertheless, it shall always be an obedient, passive, and very likely, reluctant compliance. On the other hand, the natural willingness to pay, a self-imposed commitment, shall always be stronger and make the tax system more sustainable in time since it shall be founded on a responsibility accepted and shared by citizens, in the framework of a more open, participative and democratic society.

This is not detrimental to the importance of the inherent authority in the performance of every Tax Administration; quite to the contrary, it seeks to underline the fact that tax compliance based on conviction not only responds to the inherent TA objectives, but also the need to assert democratic coexistence according to the observance of duties and exercise of the civic rights of the social conglomerate. Therefore, for a democratic relation with social cohesion, it is a priority to build a voluntary compliance environment against a coercive compliance one,9 although both are equally legitimate and convergent since they translate into a same attitude: compliance with the law.

It should be pointed out, nevertheless, that individuals better respect and abide by self-imposed regulations.JoséBernardoTorocallsthistheprincipleofself-foundationanddefinesitastheordercreated by the individuals that shall live thereby, and comply and protect it, rendering it the only order spurring freedom and the core element of governance.10

Obligation-based compliance arises from the legal order, the punitive force and the fear of punishment –which are legitimate though not self-founded elements-, to the extent conviction-based compliance originates in the taxpayer proper and thrives on his understanding, responsibility and commitment; in other words, on self-founded and legitimate principles, which adds value and endows this type of compliance with greater consistency and sustainability.

5. Law, morality and culture

In certain social contexts we may perceive a rupture or dysfunction between the law, morality and culture, whicharethreesystemsthatgovernhumanbehavior.ThistheoryleadtheMayor’sOfficeofBogotá,Colombia, headed by Antanas Mockus, to make the decision of prioritizing the so-called Civic Culture, a set of programs and projects geared at improving the conditions of civic coexistence by means of a consciousbehavioralchange,basedontheassumptionthatthevoluntarymodificationofthehabitandbeliefs of the group may become a key component of the public administration performance and the commongovernment-civilsocietyagenda.Thus,intheexperienceofBogotá,theCivicCulturestrategywas devised as an instrument to enhance the moral and cultural regulation, as well as to succeed in a greater consistency among them and between them and the observation of the law.

Along such lines of thought, the strategies for the development of the tax culture may be also conceived as tools to harmonize the ethic and cultural values, for them to result in the respect for legislation and the due compliance therewith.

9 Idem.10 Toro, José Bernardo: Education for democracy.



The furtherance of truly effective tax or fiscal policies is not possiblewithout relying on the targethuman conglomerate. In order to reach a better end in taxation, the human and social factor should be considered, as recommended by tax sociology.11 All the tax regulations and plans conceived in an officeruntheriskofbeingfruitlessifdueattentionisnotpaidtocitizens’beliefs,attitudes,perceptionsand behavior forms, their personal and collective morality, and even their ideas on how to organize coexistence.12

Its relevance is made evident especially in societies affected by weak tax awareness and an ineffective State, factors that are generally tied to –and worsened- by the crisis in social values that reinforces the theory of divorce among culture, morality and the law. In many cases, this convergence of elements adverse to taxes, and taxation in general, goes hand in hand with the cult of individualism and the prevalence of conditions that prioritize it above social responsibility, solidarity and the pursuit of the common good.

Under such circumstances, tax education may by no means be reduced to the dissemination of practices thatonlyservetofulfilltherequirementsofthetaxsystem,which,althoughvital,aremechanicalandever-changing tasks in time. Neither shall it be limited to the scope of the tax formality, the legal order and the reasons for compliance therewith, but it shall be, necessarily, an education focused on the cultural change and the prioritization of ethics in the social conglomerate.

6. Perceptions and attitudes

One of the most relevant processes for the growth of organizations is made up by their credibility in the eyesoftheusersoftheirservices.Insuchregard,theessenceofthesociallifeandthemodificationof behaviors arise from the perception and beliefs of individuals on the entities and leaders that head them.

In the case of Guatemala, for example, for many years the image of the tax authority or Tax Administration was tied to incompetence, inappropriate use of resources, and illicit acquisition of wealth by former officialsandpoorcontributionofpublicresourcestothedevelopmentofcommunities.Thelatterappliesin spite of the performance of the Tax Administration in the last decade, focused only on collection and lackinganyinfluenceongovernmentexpenditure.Nevertheless,taxpayersfailtomakethisdistinctionof functions, which underscores the fact that it refers to both sides of the same coin: on the one hand, society’s contribution to the State, and, on the other, the form in which the State returns it in the form of public goods and services.

Although the notion of reciprocity is basic and easily understood (taxes in exchange for public services), the development of the tax culture is tied to an even broader notion, tax citizenship, which offers a more comprehensive view of taxation, in which the civic duty of paying taxes, financingofrightsandsupportoftheStateconvergeontheonehand,andtheappropriateuseofresources, transparency of expenditure, accountability and the importance of the social audit or civic surveillance on the other.

But the essence of the tax culture extends beyond this, since it does not condition compliance to reciprocity or any other external element, but, to the contrary, perceives it as an inalienable responsibility that stands on its own, free from any factor that may diminish or restrict it. Therefore, the actions for

11 Montúfar, Rodrigo: Op Cit, page 58.12 IEF: Op Cit



the development of the tax culture require processes to enable the emergence of changes, as regards perceptions as well as attitudes in the individual and the social aspects, which translate in the conscious and voluntary contribution of taxes. Of course, this does not hinder the importance of the actions to improve transparency of government expenditure, the social function of taxes and the credibility of the institution in charge of collecting revenue.

As part of an integral strategy that seeks to improve collection while changing the public perception of tax compliance, a process arises for the development of the tax culture. This is not at all easy when we realized the extent and strength within different social groups of an array of beliefs and values not only contrary to taxation, but, in general, the observation of basic regulations of coexistence and abidance by the law.

There are countless cases in which wittiness and native cunning to evade taxes are celebrated, as well as the use of stopgaps to avoid them or avoid the controls by the Tax Administrations, whether for internal or customs taxes. Such beliefs become genuine anti-values, additional hurdles in the already difficulttaskofpromotingthecultureoflegalityandtaxcompliance.

In an interesting article entitled “Fiscal and Tax Psychology”, Mónica Díaz Gómez points out: “the archetype of the “native cunning” in evading taxes is accepted by the Venezuelan society owing to the absence of a genuine and deep tax culture. The taxpayer’s psychology is marked by a strong trend towards fraud andjustifiestheattitudewithfrequentlyheardquestions:WhyshouldIpaytaxesifpublicservicesareinefficient?WhyshouldIbeacomplianttaxpayerifthecorruptstealourtaxmoney?Formany,committingtax fraud is a form of pleasure that enhances personal vanity and proves skills before others. It is believed that human social behavior is determined by the principle of the pursuit of pleasure and that is why the selfishnatureof thehumanbeingmakeshim fondofhispossessionsorwhathebelieves tobehispossessions;thusthedifficultyinpayingthetaxesduewithpleasureandvoluntarily”.13

Examples of this type prevail in many Latin American countries, where genuine taxation antiheroes appear–or heroes of fraud- in social sectors that tend to be very tolerating with such type of illegality, whether it is minimized regarding the most serious violations of the law or even justifying it based on a myriad of arguments, from the pretext of government corruption to those tied to the user or consumer interest, who may purchase at lower prices without taxes.

Such beliefs shall not be deemed a component of a “culture”; rather, they are social behaviors or social behavioral patterns, frequently related to a double morality, which in public condemns illegality while practicing it in private. Thus, the strategy for the development of the tax culture as one of the pillars to support the improvement of collection shall be marked by an integral nature and a long-term approach, since there are many different factors that increase the collective imaginary, in addition to the fact that a change in values and attitudes is not achieved overnight and without an intensive and systematic interventiontodefineit.

This undoubtedly requires a strategy made up by clear working areas, consistent and appropriately structured that supplement and improve each other as a function of the development and improvement of civic values as well as the improvement of the awareness on the tax obligations. Therefore, it is not amatterofisolatedassignments,specificcampaignsorsporadicinterventionsinonetargetgrouporthe other, but rather a broader and more sustained educational effort, since only on such basis shall thecurrentandfuturetaxpayersubjectivitiesbemodified;thatistosay,redirectingbeliefs,valuesandbehaviors that shall result in the practice of new social habits and attitudes before taxation in the future.

13 Díaz Gómez, Mónica: Fiscal and Tax Psychology.



7. Adoption of strategies

7.1 Objective and scope

The chief objective of the tax culture is to instill behaviors in favor of tax compliance and against tax fraud, by conveying ideas and values that may be internalized at the individual level and valued at the social one. This implies a cultural change that explains the long-term condition, normally one of the most relevant features in every strategy for the development of the tax culture.

One of the conclusions of the International Seminar on Civic-Tax Education, mentioned before, was that there are no “recipes” for the adoption of the strategies geared at the development of the tax culture, since the inherent features in each country as well as the resources available to each Tax Administration are the factors that ultimately determine the type and scope of the actions to be undertaken in the area.

Likewise, it would be ideal to be able to work on all “fronts” and by means of a combination of strategies to reach the different beneficiaries of the program, but this generally stumbles over the inherentlimitations of the available resources, in addition to the fact that the processes feature different paces and specificities requiring different timeframes and spaces.14 There are significant differences, forexample, between preparing a didactic handbook for teachers, creating a radio campaign, creating a Web page and putting together a stand in a school fair.

TheimportantaspectisthateachTaxAdministrationclearlydefinesitstaxdevelopmentobjectivesandsets forth its priorities according to such objectives and the resources available. Gastón Bruzzone, from the Formal Education area of AFIP, explains the Argentine experience: “In our case we started with training courses for elementary school teachers and authorities. Later we incorporated the secondary and higher education levels. But I think that in our case, the education teams of the Tax Administrations, it is more effective to work in stages. The important aspect is not to lose sight of the fact that we are undertaking a very long-term effort; that cultural changes are sustained and extended in time and, therefore, it is always possible to add actions to those already implemented successfully.”15

7.2 Stakeholders

TheTaxAdministrationmay be the first stakeholder in the development of the tax culture and actaccordingly,todefine,promoteandfinanceit,butitisbynomeansaloneinthiseffort.Theeducationadministration is called upon to play a key role and it is clear that the rest of the public administration shall also form part of the process. In fact, it shall be deemed a State policy and not a government policy, a permanent program and not a cyclical project, so that not only the tax agency in each country assumes responsibility over the tax education program (although it shall be the sole authority for its content), but many other players should become involved and alliances be pursued in such respect: the rest of the Tax Administration, ministries of education, the private sector, municipal or provincial corporations, etc.16

14 Comment by Sergio Rufail (AFIP, Argentina) in the Virtual Civic-Tax Education Forum: “As regards the level at which we should begin, I believe in ALL the levels in which we may sustain the strategy in time. All levels are important, but as we move higher, the strategy shall be improved, strategists shall become increasingly convinced and more prepared, since the arguments shall be increasingly more difficult to contain.”

15 Bruzzone, Gastón (AFIP, Argentina): comment in the Virtual Civic-Tax Education Forum.16 Goenaga, María: Op Cit



Moreover, alliances with other players (private companies, NGOs, international agencies) legitimate the message of the program since they do not represent the voice of the state, but the private commitment to common interests.17

7.3 Beneficiaries

Some believe that all the actions of the Tax Administrations –including tax education- shall be focused exclusively on the taxpayers, effective or potential, since they constitute the social base of effective collection. From this standpoint, it is normal to consider taxation as an event that only pertains to adultsand,morespecifically,adultsthatconductacertaintypeofeconomicactivitysubjecttotaxes.Therefore, the young would have no reason to worry about taxation, since they are totally foreign to the tax event until they start to participate in the economic activity and become responsible for formal tax obligations. From this standpoint, the tax education of the younger citizens would lack sense.18

The Institute for Tax Studies of Spain poses the following questions: Is it possible to assert that children and youths are totally foreign to the tax event? Shall the education system ignore this fact? Reality indicates otherwise: neither are the latter foreign to the surrounding world, including the economic activities and taxation, nor should the school ignore the tax event, to the extent it is a matter of citizenship and a fundamental part of the educational mission is, or should be, to educate the citizens of tomorrow, that is to say, to provide for the necessary conditions for individuals to learn to adapt their behavior to the regulations in effect in their society.

Tax norms form part of the set of social norms to be met by an adult individual in a democratic society, by which the tax responsibilities should form part of the set of values that every citizen shall assume, respect and defend.19 According to this approach, shared by the representatives of the Tax and education Administrations gathered in Buenos Aires, in October of 2007, children and youths are the genuineandnaturalbeneficiariesof the taxeducationprograms: “Formal taxeducationshall reachall levels, since its approach entails complexities and interests inherent in each development stage. A child learns basic coexistence rules. A teenager understands the social sense of taxes. A professional individual embraces rules and habits for his/her performance.”20

Theotherimportantbeneficiariesoftheactionsofthetaxculturearecitizens.“Theeffortstargetedatthem shall be as intensive as those geared at children and youths within the formal education. In the middle term, citizens shall convey such values to their children, from their personal conviction”,21 in addition to the fact that the taxpaying population of the present belongs to this sector, which along with corporations make up the great market of the Tax Administration overall. Although the TA can not and shall not disregard the commitment of informing and guiding taxpayers on the formal taxation aspects; that is to say, the norms and practice of tax compliance, the essence of the tax education transcends the mere knowledge of taxes (what they are and how to pay them), to focus on the social and ethical context to which they pertain, which is more related to the reason and purpose of paying taxes in the framework of a coexistence model governed by rights and duties for all the members thereof.

Lastly,athirdrelevantbeneficiaryofthetaxeducationprogramsistheTaxAdministrationandFinanceMinistry staff, which ultimately constitutes the face of taxation in the eyes of citizens, from the standpoint of revenue as well as the administration and allocation of expenditure. According to Rodrigo Montúfar,

17 Rufail, Sergio. Op Cit18 IEF: Op Cit19 Idem.20 Rufail, Sergio. Op Cit21 Idem.



one of the Directors of SAT of Guatemala, the tax education efforts shall be permanently focused on theofficialsandemployeesoftheTaxAdministration,forthemtoknowanddulyenforcethetaxlawsand learn how to guide the taxpayer to pay taxes correctly.22 This creates the need to include public servants in general in this target sector, many of whom frequently fail to realize the relation of taxation and their performance.

7.4 Scopes and messages

By virtue of the ultimate goal of contributing to the development of citizenship, the strategy shall not belimitedtothetaxsphere,butalsoextendtothefiscalarea.Eurosocialdefinesitasfollows:iftheappropriate compliance with the tax obligations is one of the pillars that sustain the arch of civilized coexistence, the other is the appropriate management of the government expenditure programs. A countrymayenjoyaneffectiveandefficientTaxAdministration,but ifJustice isvenal,orEducationandHealthdeficient,orthegovernmentofficialsaredishonest,thebuildingshallbeunsafe.Thetaxeducation shall not lose sight of the other aspect of the public budget and also see to the other aspect of tax fraud that relates to government expenditure. Thus, tax education is a strategy not so much to improve collection, but to build a better society with everyone’s effort.23

Abasicaspectrequiredtodefinethestrategiesofdevelopmentofthetaxcultureistheunderstandingof the social elements tied to the behavior of the groups. Even when behaviors are common, each group features its own codes, in many cases learned from one generation to another, conveyed from parenttochildren,teacherstopupils,aswellasinfluentialplayerstothepublicopinion.

All this is transformed into truths by means of a beliefs and behaviors’ socialization process, which enables it to be validated informally, but transcends and is acknowledged as a commonly accepted attitude.

Thus, the development of the tax culture requires the creation of new codes, new messages, new educational content and new forms of communication that enable to approach the different groups appropriately, easily and reliably.

The need to adopt tax education strategies is inversely proportional to the level of tax compliance. The more and better citizens meet their tax responsibilities, the less necessary it appears to foster the tax culture. Even so, countries with high levels of tax compliance, such as Canada, United States, Switzerland and New Zealand, include tax development in their educational programs to “prepare for adult life”.24

7.5 Education as the pillar

Undoubtedly, the backbone in the development of the tax culture is education. It constitutes the most powerful tool to transform individuals’ ways of acting and thinking. Isn’t a society’s culture the result of education?ThatiswheretheTaxEducationmissionfindsitspurposeanditsinterestintheeducationalprocesses.25 Thus, if issues relative to health, environment and nutrition, road safety education or education on electoral topics are included in the education systems, then the development of the tax culture and tax education shall be also included.26

21 Idem.22 Montúfar, Rodrigo: Op Cit, page 40.23 Eurosocial, Taxation Sector: Op Cit24 IEF: Op Cit25 Salas, Dolores (SAT, Mexico): comment in the Virtual Civic-Tax Education Forum.26 IEF: Op Cit



According to an African saying, “a whole people are necessary to educate a child”. This is the approach followed by Bernardo del Toro when he asserts that the greatest challenge in any democratic society is that of building a public education for democracy, that is to say, focused on the development of citizens who give life and sustainability to democracy: knowledge makes sense from the standpoint of democracy to the extent school contributes to form individuals capable of building the social order that enables an honorable life for all, in cooperation with others.

According to Del Toro, democracy is not natural in the human being. Democracy is an invention and, byvirtuethereofshallbetaughtandlearned.Thus,oneofthreefirstpurposestomeetinademocraticdevelopment process is that children understand that, in social terms, the existing order and the relationsarising in societyarenotnatural, butbuilt bypeople,and therefore,modifiable.Whenaneducation system believes that everything is natural, it is very easy to accept that there are children that may pass the school year and others that may fail, without any fundamental. But when we learn that the social order is created, the only logic is that all children succeed, because school success may becreatedandbuilt.Afirstfeatureofdemocraticeducationandthedemocraticethosinademocraticculture is that everyone understands that all these notions shall be taught and learned because they do not come naturally.

Such criterion is equally valid for the development of the tax culture. In a democratic society, taxes derive from social agreements made into laws by virtue of the power that the citizenry proper delegates upon lawmakers and authorities. Therefore, the tax system represents a self-imposed social commitment that every citizen shall live by and respect, based on the same values that enable to exercise civic rights and obligations. It is a creation that, just like democracy, shall be taught and learned because it entails notions and values that are not natural, but created by the society in which they live and according to the State in which they wish to live.

Values are not inherently educational contents but the basis of the education strategy, and require a cross-sectional and ongoing treatment in the education curricula overall -from elementary to higher education-, in line with the notion that the most relevant means to teach and learn them shall be based on experience, since it enables a better understanding and incorporation thereof.

Nevertheless, it is not recommendable to limit themessages and content of fiscal development toone educational current or the other. Just like the educational sphere is unlimited when it comes to education for life, the same applies when it comes to educating for civic life, which is ultimately the fundamental end of the tax culture.

In fact, functional interactions exist among formal, non-formal and informal education: complementary, supplementary, substitution, reinforcement and collaboration relations as well as intervention, so that, even if school forms part of the formal education system, it may include non-formal and informal processes. It is even considered that the formal educational institutions should increase the use of resources from the other two educational trends. In the framework of formal education, the knowledge obtained by individuals in non-formal and informal contexts should be valued and accepted. It becomes necessary to adapt to platforms that enable and promote the coordination among instances, in order to optimize the complementarity.27 The genuine tax culture is instilled in all levels of education, for future citizens to be convinced of the need to contribute to the development of the community.28

27 Trilla Bernet J, CEAC, Barcelona, Spain: non-formal education.28 Montúfar, Rodrigo: Op Cit, page 30.



7.6 Conditions of the strategy and its complementarity

One of the performance issues that tend to arise in every tax education strategy is to phase in and harmonize the educational contents in line with the principles and purposes referred to in this document. Conveying them to the intermediation agents, chiefly teachers, is another crucial topic, particularlyowing to the importance of the school environments in facilitating learning and incorporation of the civic values by means of the appropriate instruments, for example, educational material and games, discussion workshops, practical experiences, etc.

The selection of the audiences and the means to reach them constitute additional relevant challenges for the strategy and entails the need to articulate the latter in the form of sequential or complementary projects, as well as establish objectives and inherent indicators for each one of them.

The examples mentioned set forth two of the basic conditions to be featured by the tax culture strategies:performancecontinuityandspecificityofitsactions.Inlinewiththese,theyalsohighlight,among others, the necessary socialization with other players; its cross-sectional nature in the education system; its dissemination towards non-formal and informal spaces; and its inclusion in the government agenda as well as the media, which tends to be an important sphere in the development of images and perceptionsthatinfluencetheirsocialbehavior.

But there are also other strategies inherent in the TA, which may supplement and strengthen its tax culture action, such as the case of all those referred to taxpayer service. The complex tax systems, cumbersome formalities, failures in the guidance of taxpayers or inappropriate taxpayer assistance practices are not good allies to foster the tax culture. To the contrary, they foster counterproductive effects thereupon; to the extent they undermine the image of the TA and affect its credibility.

Thus, the adoption of actions to simplify and make the tax and customs processes more transparent, as well as rendering better taxpayer services may be very instrumental to improve the purposes of the tax education strategy and, in general, the social perception regarding the performance of the collection agency.

8. The experience of Guatemala

Untilthreeyearsago,Guatemalahadnosignificantexperienceinaspectsrelatedtothetaxculture.Except for certain isolated and basic attempts, the issue was not included in the public agenda. It wasn’t until 2005 that the Tax Administration undertook an integral effort in such direction, by means of dissemination and promotion actions, as well as different formal, non-formal and informal education projects.29 This short but intense experience has been an input for this document, by which we have made a critical review and provided feedback on our vision on the development of the tax culture and its importance as a strategy to promote voluntary compliance.

29 In order to define each one of them, we shall adopt the notions defined by the Institute for Fiscal Studies of Spain, IEF:• Formal education: is the one developed within the educational system when it is marked by a formal denomination that leads to the

achievement of a degree, diploma or certificate authorized by the education administration.• Non-formal education: is the one developed outside of the educational system through courses or training activities that do not result in

a degree, diploma or certificate authorized by the education administration.• Informal education: it refers to every educational process that is delivered intentionally or unintentionally by any means and by any

institution.



For example, during the program design phase, SAT tried to separate the tax culture in its capacity of obligationanddutytopayfromthefinalendofresourcesandtheforminwhichtheyare“returnedasservices” to society. This is due to the fact that they are two functions from two different institutions and the Tax Administration has no control over the distribution of income.

Nevertheless, in the discussion workshops that we conduct with the participation of local authorities and civil society from the twenty-two departments (provinces) of the country, it became very clear and obvious that there is no better promoter of the tax culture than appropriate government expenditure –efficient,rationalandtransparent-.Inotherwords,societyitselfshowedusthatanimportantstimulus(or lack of stimulus) for taxation is made up by the management and allocation of government funds, in addition to the fact that, in the case of many countries –among them Guatemala-, the enforcement of taxes is deemed a discretional act, related to the positive or negative perception on the use of funds.

One of the objectives of the development of the tax culture shall be, precisely, to break the vicious circle and create awareness that taxation is not only a legal obligation, but a duty of each person with society. Additionally, the individual shall be convinced that meeting such responsibility grants the moral authority required to demand the Government Administration to make the appropriate and transparent use of public funds.

It is worth pointing out in the case of several Latin American countries –including Guatemala- that our people represent diverse cultures and, therefore, the tax culture strategies shall be adapted to such diversity to be effective in each one of the groups that make up our societies.

For the implementation of the Permanent Tax Culture Program in February of 2005, we did not rely on an initial measurement of citizens’ taxation knowledge, which would have been desirable. In order to develop the program strategy and select the actions and priorities, an initial proposal was the starting point addressed in the discussion workshops, as mentioned above.

Among the lessons learned in such workshops, we may mention:

The appreciation of the social aspect of taxation, that is to say, the relevance of considering the other side of the coin–the allocation of revenue-.

The importance of social participation in the management and execution of the tax culture development projects.

The need to develop an integral strategy with three areas: Education (Formal and non-Formal), Promotion (Informal Education) and Dissemination, based, in turn, on three cross-sectional axes: Information, Training and Awareness.

8.1 Actions of the permanent tax culture program

Hereunder,webrieflydescribetheactionsdevelopedtothepresentaspartofourintegralstrategy:

Information considers aspects such as the dissemination of the program, its content and actions, the creation and maintenance of the Tax Culture Portal on the Internet, the implementation of different awareness campaigns and the publications on the basic information contents, for children and youths as well as adults and taxpayers in general (for example, the publication on the media of different informative and educational press publications: infomercials on tax, customs and the country’s tax history).



Development refers to all the educational actions in its different approaches (formal, non-formal and informal), among which the following are included:

a) Inclusion of the tax culture in the elementary school curricula, in addition to the distribution of school texts and tax education games;

b) Joint work with the Ministry of Education on the review of the educational curricula of the basic educationanddiversifiedhigh-schoolcyclesaswellason thecurricular transformationof theprogram for the Bachelor’s Degree in Accounting;

c) Development of a program to support the professional development of individuals with the Bachelor’s Degree in Accounting based on the implementation of a higher tax education course (onsiteandvirtual)andsupplementedbyanacademiccertificationprojectforsuchprofessionals;

d) Taxation training courses, for taxpayers as well as individuals with a Bachelor’s Degree in Accounting who conduct intermediation activities between the former and the TA;

e) Development of a tax training program in Mayan languages for the different rural areas in the country;

f) Staging two tax culture musicals for schools and public activities, as well as production of the audiovisual versions thereof;

g) Execution of the Tax Lottery program in the 22 departments of the Republic, conceived to stimulate consumers in general to request the invoice of their purchases of goods and services;

h) Presentation of an interactive audiovisual exhibition and a space for computer games in an area with important assistance of children and families;

i) Production of a musical video clip mainly focused on the teenage audience, disseminated on different media: television, radio, the Internet and cellular telephony; and

j) Production of a television series for children in the educational entertainment area.

Lastly, the creation of tax awareness plays a vital role in the Education as well as Dissemination projects and activities, since it seeks that the two previous axes (information and development) transcend the mindsofbeneficiariesandbecomeprinciplesandperceptionsthattranslateintovoluntarycompliancebehaviors, by the present as well as future taxpayers.

8.2 Inter-relations

Apparently, the school environment is not proper of the Tax Administrations, which underlines the relevance of relying on the support of the education authorities, but, above all, achieving the commitment of teachers on the issue. In the case of Guatemala, the cooperation process among the Tax and Education Administrations is still incipient, but the initial experience has set forth that classrooms are fertile ground not only for the formal educational actions, but also for the informal ones, such as school competitions and theater plays, for example.30

Although education is by excellence the environment to develop the tax culture –particularly in the case ofchildrenandyouths-, theothergreatfieldofactionof thestrategyadopted inGuatemala is thatof dissemination, as set forth, which includes advertisements via conventional media (newspapers, radio, television) to alternative media advertising (outdoor signs, artistic performances, sports events), includingtheproductionofdifferentelectronicandprintedmaterial,andthespecificInternetPortal.

30 Comment by Sergio Estrada (SAT, Guatemala) in the Virtual Civic-Tax Education Forum: “Not every initiative shall be considered as a formal education initiative. Certain efforts may be very effective from the alternative or non-formal standpoint, provided they are well managed. The important aspect is that every action responds to a strategy carefully defined by the TA and devised in terms of impact pursued as well as cost/benefit for the administration.”



The dissemination actions not only enable to reach other target groups, but also supplement the activities aimed at children and youths. Additional and different educational mechanisms31 always coexist with school, among which we may mention the media, especially relevant by their coverage andinfluence.

InthecaseofGuatemala,thecommitmentofotherpublicplayersisarelevantneed,chieflybecause,as we have mentioned before, the functions of the Tax Administration are limited to collection, while the expenditure allocation is a function of the Central Administration and, particularly, the Ministry of Public Finance. Thus, the actions for the development of the tax culture shall not exclude the references on how to manage and invest government resources, since the issue calls for this conceptually integral approach.

8.3 Strategy principles and features

The development of the SAT tax culture has enabled to observe a series of principles, which in line with thefeaturesofitsinitialdefinitionandthoseincorporatedinthecourseofitsperformance,havegrantedit an inherent physiognomy, which in turn has facilitated its incorporation in the public agenda. Among such distinctive features we may mention the following:

Direction: relevant products, messages and actions for each target group have been developed, and in spite of conveying a single core message, they have been adjusted to the language and features of the members in each segment.

Mechanism: in addition to the above, the use of stimuli such as images, music and other audiovisual elements has been key to strengthening the creation and dissemination of the relevant messages.

Message: one of the notions learned from the program’s practices and actions is the use of clear and simple language, accessible to all publics, and maintaining a single message for each one of the products or services, avoiding ambiguity or unnecessary digressions.

Consistency: it is inherent not only conceptually, but also as regards perception, which attaches importance to the use of images, characters, colors, forms and all the stimuli related to an immediate identificationoftheproductsorserviceswiththecoremessage.

Nature: a working methodology has been adopted, which on the one hand calls upon reason essentially based on common sense, and on the other, focuses on the audiences’ emotional perceptions on aspects such as kindness, happiness, humor and enthusiasm of teamwork, which generated identity andidentificationwiththeprogram’scontentandobjectives.

Facilitation: it is achieved by stimulating thoughts and emotions, games, knowledge based on new materials and the adoption of traditional and alternative communication channels that include the Internet as a technological element.

Tools: a variety of tools have been employed such as: books, games, electronic devices and Internet applications, which may be within the reach of the different target groups and are easy to reproduce thereby.

31 Trilla Bernet: Op Cit



Audiences: the appropriate selection of the audiences has been a process implying deep efforts with key players and has been performed in the interior of the country to know the attitudes and perceptions of the different audiences as regards tax matters, as well as their reactions before different program actions. Products: a diversity of educational as well as communicational products and materials have been designed by specialists after an adequate validation, which have served to create a “basis of trust” and a link between the program and its different target groups.

Receptiveness: aside from isolated expressions of skepticism or rejection, we have detected receptiveness, acceptance and other positive reactions to the tax culture efforts in the course of the development of the program, which has been used to extend the social pillars thereto and work on the articulation of new alliances with different institutions, public, private and international.

Team: this is a key factor in the strategy, on the one hand due to the fact that the creation of a multidisciplinary working team has enabled to create messages, products and approaches with different professional views and on the other, that the alliances with other players and institutions enhances the program and favors its sustainability.

Support: nostrategymayoperateifitlacksthenecessaryfinancing.Fromthebeginning,theprogramhas relied on the support of the three main Tax Administration authorities, set forth an appropriate budgetfor theprojectsandactionsdefinedsince2005,andsince2007ithasbeensupportedbyadedicated administrative unit that directly reports to the senior authority of the institution.

8.4 The local environment and reciprocity

In several native communities of Guatemala the tradition of making contributions of different nature has survived (monetary, in kind or in labor) to carry out work or activities for the benefit of thecommunity. This contribution, called kuchuj in the Mayan k’iche’ language, represents an ancient social practice that clearly illustrates the principle of reciprocity mentioned before, since it constitutes the materialization of a payment or investment prior to obtaining a good or service aimed at satisfying a collective need.

Likewise, numerous native communities follow the tradition of gathering contributions to pay for the expenses of Mayan spiritual ceremonies or rituals, as well as in the churches of different religious denominationswefindthepaymentofthetithebywhichthecongregationfinancesthematerialsupportofthechurchand,inexchange,receivesaspiritualgratificationaccordingtoitsbeliefs.

Such examples not only express the importance of reciprocity as the ground for the voluntary contribution in exchange for a collective or individual benefit, but also state the relevance of thelocal environments, relatively closed or limited, so that the practices of a genuine, collaborative, self-founded practices may be materialized and sustained therein, and tied to the transactional notion of “give in order to receive”.

Such type of local experiences may constitute a good starting point to initiate tax culture projects that, from the micro or local viewpoint, may enable to build cases that show good practices on the issue, whether in school, a youth club or an artistic or sports association.

For example, in Guatemala, SAT is launching a pilot project on the “model municipality” (named Sound Municipality),whichinitsfirststageseekstolaythegroundworkforamunicipaltaxcompliancemodel



based on intensive taxpayers’ registration campaigns and the use of the mandatory invoice in all the transactions of goods and services, as well as the deepening of numerous tax culture projects and actionsinthemunicipality,especiallyintheeducationalfield.

8.5 Insight and exploring

The dynamic of every strategy to develop the tax culture requires more insight of its actions on ground that has proven fertile, as well as exploring new areas to extend or supplement the efforts of the educational experience.

For example, the formal education actions, on the basis of their nature and broadness, appear among the ones requiring more insight, but they may be also strengthened by the application of distance education tools, which although posing the challenge of promoting access to new technologies, present attractive conditions in terms of economy, coverage and impact.

As regards the approach and contents, the experience of the tax culture program in Guatemala features a progressive migration to the broadest sphere of citizen development, which opens the doors to a new dimension for the scope thereof, while it offers a more diverse array of educational options and potential strategic alliances.

Finally, understanding the relevance of improving taxpayers’ service and assistance has lead SAT to incorporate this type of initiatives into its strategic institutional plan for 2008-2011, under the motto “easy and sound”, precisely with the purpose of underscoring, on the one hand, its commitment to making formalities and procedures easier and more transparent, while, on the other it emphasizes the importance of achieving full, fair and accurate compliance with tax obligations. The continuity of itstaxculturestrategy,aswellastheexpansionanddeepeningoftheactionsundertakeninthisfield,is called to contribute in the achievement of the objectives of such broader institutional strategy, since theyalreadyconstituteasignificantcomponentthereof.

9. Conclusions

1. The payment of taxes is the expression of compliance with a legal norm, which may be determined by the obligation to respect the law or the conviction that tax compliance is a civic duty. The latter is the behavioral expression of the tax culture, which consists in the set of principles and values that determine compliance as the result of the understanding and self-founded acceptance of the regulations that govern it.

2. The source that legitimates the performance of the Tax Administration is, fundamentally, the law, and, therefore, the exercise of the authority stemming therefrom. Compliance with tax duties responds toanorderestablishedby law,markedby regulations, termsandspecificsanctions,which grant the tax authority the power to collect taxes and enforce authority against those who fail to meet their tax obligations. Nevertheless, in order to promote democratic coexistence with social cohesion, it is of utmost priority to create a voluntary tax compliance environment rather than an enforced compliance one, although both are equally legitimate and convergent in the sense that they translate into a same attitude: abiding by the law.

3. The tax culture is integrated into a broader notion, that of tax citizenship –which spans the correct compliance with such obligations, from the standpoint of revenue as well as government expenditure- and relates to the other two spheres of social values: the culture of legality and the development of citizenship, that is to say, the development of responsible citizens that exercise their rights and meet their obligations.



4. The Tax Administration shall conceive civic-tax education as part of its core functions, since the development of a tax compliance culture in the long-term constitutes one of the strongest and reliable bases for collection, by taking the form of a responsibility accepted and shared by citizens.

5. Nothing advances the tax culture better than an adequate government expenditure, since according to the reciprocity principle, the efficient, rational and transparent use of public resources -bytransforming them into goods and services for the common good- legitimates the State collection function and motivates society’s voluntary compliance with tax obligations.

6. The development of the tax culture shall be deemed a systematic and permanent long-term effort, sustained by principles, geared at the reinforcement of civic values and, consequently, focused on present as well as future taxpayers (children and youths), since it constitutes one the bases to create and sustain democratic citizenship.

7. The tax culture development strategy constitutes a tool to harmonize the ethic and cultural values to contribute in the promotion of the culture of legality.

8. The need to adopt strategies to develop the tax culture is inversely proportional to the level of compliance with tax responsibilities. Even so, countries with high levels of tax compliance promote tax education as part of the school curricula to prepare for adult life.

9. The tax culture is fundamentally aimed at instilling behaviors in favor of tax compliance and against tax fraud, by conveying ideas and values that may be internalized individually and valued socially. This entails a cultural change that underlies the long-term condition as one of the frequent and most important features of any tax culture development strategy.

10. There are no “recipes” for the adoption of strategies geared at the development of the tax culture. They are rather the inherent features in each country, as well as the availability of resources for each Tax Administration, which ultimately determine the type and scope of the pertinent initiatives. Themost important aspect is that eachTaxAdministration clearly defines its tax developmentobjectives and establishes its priorities according to them and the resources available.

11. The Tax Administration is logically the largest stakeholder in the development of the tax culture, but this does not make it the only one. The education administration and the rest of the government administration is also part of the process, since it shall genuinely take the status of a State policy rather than a government policy, of an ongoing program and not a cyclical project, with the participation of the local administrations and other sectors and civil society institutions.

12. Since the tax norms shall constitute a part of the set of values that every adult individual must assume, respect and protect in a democratic society , children and youths, to the extent they are futurecitizensandtaxpayers,arethenaturalbeneficiariesofthetaxcultureprograms.Alsoincludedare the current, effective and potential taxpayers as well as the staff of the Tax Administration and public servants in general.

13. The backbone of the development of the tax culture is education in its different modalities (formal, non-formalandinformal),sinceitrepresentsthemostinfluentialmeanstotransformindividuals’behavior and ideas.

14. Just like in the case of the democratic culture, the agenda of principles and values that constitute the tax culture shall be taught and learned, since it entails notions and fundamentals that are not natural, but created by the pertinent society where individuals live and according to the type of State envisioned.



15. The taxation-related values are not, per se, educational contents, but they constitute the basis for the education strategy and require a cross-sectional and ongoing approach in the overall educational curricula.

16. Tax education may by no means be reduced to the dissemination of practices that only serve to fulfilltherequirementsofthetaxsystem,which,althoughvital,aremechanicalandever-changingtasks in time. Neither shall it be limited to the scope of the tax formality, the legal order and the reasons for compliance therewith, but it shall be, necessarily, an education focused on the cultural change and the prioritization of ethics in the social conglomerate.

17. Although education is by excellence the fertile ground for the tax culture –particularly for children and youths-, its effectiveness is normally supplemented and enhanced by information and dissemination actions, by conventional as well as alternative means of communication.

18. Institutional support, availability of appropriate resources, conscious assessment and selection of the available options, the appropriate selection of audiences, clear and consistent messages, as well as the connections that are established with the target groups, are relevant conditions to furtheranytaxeducationstrategy,totheextenttheymaybedefiningforitseffectiveness.

19. Local experiences may constitute a good basis to start tax culture projects, which, from the micro or local standpoint, enable to build cases of good practices on the issue.

20. The strategies for the development of the tax culture shall be marked by continuity in its furtherance, specificityinitsactions,socializationwithotherplayers,cross-sectionalinterventionintheeducationsystem, extension into the government public agenda as well as the media. Likewise, they may be supplemented and enhanced with other Tax Administration strategies, such as those related to taxpayer assistance.



Why tax education?

1. Structure of the tax education program at AFIP

1.1. Regional tax education referees

2. Formal education actions

2.1. Cooperation agreements 2.2. Teacher training course: Tax education and citizen

training 2.3. Teacher training for the polymodal level (2nd Cycle of

teaching for 15-17 year old students) and Training of Trainers

2.4. Curricular updating. 2.5. External evaluation of formal education actions

3. Nonformal educational actions

3.1. Game areas 3.2. Traveling plays 3.3. Participation in fairs 3.4. Presence in mass communication media 3.5. Publications in children reviews 3.6. Tax education Web page 3.7. Virtual games

4. Combined actions

4.1. Contests 4.2. AFIP goes to school

Preliminary conclusions

The Social Role of the Tax Administrations

Beatriz Fontau Argentina

In the past years, the tax administrations have had to face the challenges originating from their own realities as well as from the impact of the international context. In fact, the general consequences of the globalization of trade and finances, as well as the new and more sophisticated maneuvers of evasion, avoidance and contraband, pose to the administrations the need for a constant repositioning that may allow them to respond to these complex circumstances.

To assume such task, they must maximize their efficiency and effectiveness and be concerned about the legitimization of their role, not only from the perspective of their collection and control tasks, but also of the commitment to promote another form of relating themselves to the taxpayer universe and society in general.

Likewise, it is recognized that such relationship must be based on principles of justice and equity, values that should additionally guide all the political decisions made by the State with respect to the provision of goods and services for satisfying public needs. Bearing in mind that the resources contributed by the Treasury are the main source of public financing, the social responsibility of the tax administrations becomes clearly evident.

In our society, however, the link that sustains these relationships is affected and, accordingly, the social dimension attributed to the taxes (as redistributive principle sustained on equity and solidarity for the benefit of society as a whole), is at present, seriously being called into question. The appearance of this tension in the relationship between taxes and the satisfaction of public needs, does not exclusively respond to economic factors, but rather is expressed and found within the framework of a specific culture.

On understanding that the tax issue is part of a complex cultural framework, it was considered that, along with its “traditional” functions the tax administration should face actions aimed at promoting a new tax culture, while at the same time consolidating its institutional role in society.

WHY TAX EDUCATION?

To achieve levels of efficiency and effectiveness in compliance with the specific functions of the tax administration and that such standards may be sustained through time, we begin with the conviction that the two main functions – tax collection and Social Security and the control of foreign trade – should be supported by actions of another type that would lead to promote voluntary compliance with the Law. Another approach should have been undertaken in society with respect to the audit and control strategies. It should have been based on a double purpose: on the one hand, that society revalue the social benefits derived from tax collection and, on the other, that it recognize that tax violations are detrimental to the entire community.

In this sense, the series and implementation of these actions are not unrelated to the changes that have taken place at the political, social, economic and cultural levels, which likewise affect the configuration of the relationships in society.

To work in tax education above all implies considering the social dimension of taxes. We stand by the belief that the tax contribution has an eminently social sense and, is therefore of a public order.

We then assume as an essential and long term objective, to contribute to the development of a “new tax culture”. To this end, we approach, in particular, those who in the future will be in charge of the decision-making processes: the children. This was thus the origin in late 1998, of our Tax Education Program.


66 TAX ADMINISTRATION/SOCIAL ROLEBeatriz Fontau (Argentina)

We recognized that in order to achieve these objectives, we required the participation of other social actors, particularly the school, since it is the central institution in the dissemination of knowledge. We believe that the contents linked to the tax issue are part of that series of knowledge which the individual should take advantage of, in is socialization process. However, such contents do not explicitly appear in the curricular designs and to overcome such deficiency is part of our intervention strategies. While this objective is achieved, we continue to rely on the direct work of the teachers, assuming that the educational sphere is the privileged area for bringing about changes, consolidating and sustaining them through time.

To begin teaching this subject matter since the early school years is based on the fact that in this stage, a new meaning is given to the first lessons learned in the relationship with the parents and in the interrelationship with peers. In this process, the word of the teacher (at times, even more than that of the parents) acquires greater importance. The ever more consolidated “environmental awareness” is a good example of a cultural change that originated in the school based on projects implemented by the teachers, children and, in general, the entire educational community.

Now then, the establishment of a new tax culture calls for in-depth transformations, of concepts, perceptions and values, as well as of citizen attitudes and practices. Therefore, we understood that we had to work not only within the sphere of formal education, but also in informal education.

If we are correct with respect to the basic assumptions we maintain and if we are capable of maintaining through time the work of creating awareness, a time will come when, in an autonomous and responsible manner, the citizens will have by conviction, attitudes condemning evasion, contraband and underground work and we will consider that compliance with our tax obligations is a basic responsibility which favors living in a community. The habit makes the monk and much more so if the monk finds sense in his practice: collection by means of voluntary compliance, from every viewpoint is much more valuable than that which is obtained through fiscal auditing or enforced collection.

In sum, in the Argentine Tax Administration we recognize that we have obligations that arise from the legislation and the tax, customs and social security systems, but also that we cannot avoid a commitment that is related to the legitimization of our role. That is why we have been developing two converging strategic lines:

• more and better taxpayer services to promote voluntary compliance, and

• tax education to generate a new culture.

1. STRUCTURE OF THE TAX EDUCATION PROGRAM AT AFIP

The Program began in late 1998 and starting in 2002, it was decided to strengthen and give continuity to the actions that were being carried out, including other strategies particularly linked to nonformal education.


67TAX ADMINISTRATION/SOCIAL ROLE Beatriz Fontau (Argentina)

Converging Strategic Lines

More and better TAXPAYER SERVICES

Promotion of VOLUNTARY

COMPLIANCE and new TAX

CULTURE

TAX EDUCATION to people in school age

The design, implementation and evaluation of the actions that are carried out within the Program are under the responsibility of a specific unit that operates under the Training Directorate, which is dependent on the Deputy General Directorate of Human Resources. The members of the team are from various academic disciplines: Educational Sciences, Psycho pedagogy, Psychology, Social Communications and Economic Sciences this allows for an exchange of views and perspectives that enrich and empower the intervention strategies.

In the country’s inland, there are other agents of the institution that act as referees of the Program.

In order to achieve the proposed objectives we designed a series of strategies according to the implementation areas.

1.1 Regional Tax Education Referees

The creation of the figure of the Referee was based on the need to count on an administration official that would act as articulator or facilitator of the various efforts which AFIP is carrying out in the different provinces. Likewise, although there is central coordination, the intention is to federalize the strategies and actions in the various areas such, as for example, replication of the teachers training courses.

Another element that motivated the creation of this figure is the organization of the Argentine educational system and its influence in the development of the Program. The decentralization process undertaken in the 90s afforded exclusive and specific competencies to the Ministries of Education of each province. This situation requires particular relationships with each one of the Ministries which, starting from the central unit, many times are rendered difficult due to operational as well as distance issues.

Ever since the regional referees began their functions, the relationship with the Ministries, as well as with other public and private institutions have been increased and have resulted in the elaboration and execution of joint projects.

2. FORMAL EDUCATION ACTIONS

These were the first to be implemented and were aimed at the training of teachers of the second and third levels of Basic General Education (EGB, acronym in Spanish) (students between 9 and 14 years of age). As they were validated in practice, they began to be diversified.

2. 1 Cooperation Agreements

Since our country’s education system is decentralized, the possibility for implementing Tax Education actions must be provided in the terms of agreements signed with the educational authorities of each one of the provinces.

Tax Education Division

Provincial Referees

Formal Education Actions

Non Formal Education Actions

Combined Actions



We have currently established agreements with 18 of the 24 ministries, mainly providing for:

• the holding of teacher training courses, • the elaboration of updated curricula (at the various levels of

teaching), • the implementation of other strategies that may favor

institutional articulation (for example, Contests, or holding in schools, of plays on the subject).

In these institutional agreements, we have committed the participation of other entities, particularly from the state sphere, such as the provincial and municipal secretariats of finance that have shown an interest in the development of the different initiatives.

2.2 Teacher Training Course: Tax Education and Citizen Training

The training devise was focused on teachers of the 2nd and 3rd levels of Basic General Education (children between 9 and 14 years) from all areas. Since the beginning of the Program we trained over 7000 teachers, which implied an extension to some 210,000 children. The contents were covered from a transversal perspective, in the curricular sense (it is proposed to be done from different disciplinary areas); institutional (committing the largest number of members of the school community), as well as social (going beyond the sphere of schools). This way of approaching the tax issue is based on an attempt at, complementing the purely technical aspects that at times are only accessible to specialists, to insert them in a context and a process within a cultural complex framework.

The implementation of the course begins with understanding that, in order to develop a new tax culture, one must previously work on different aspects inherent in the exercise of citizenship. Even more so, before considering the issue of democratic coexistence it is necessary to work (with the students as well as with the teachers) in the development of values. These basic subjects have not been randomly selected and their location responds to a mode of organization that favors understanding of the contents. Below is a summary of those basic subjects.

Development of values

We understand that taxation is the economic mainstay that sustains the democratic State. This leads us to the need to understand the correspondence between the civic rights and responsibilities and the interrelationship of private interests and collective benefits.

We believe that the development of the tax culture is closely related to the training of citizens because it corresponds to the exercise of a responsible citizenship and as such, is closely linked to ethical development.

Formal Education Actions

Cooperation Agreements

Teacher courses

EGB LevelPolymodal LevelTraining of trainees

Updated curricula

External evaluation

Development of values

Democratic coexistence

Toward a tax culture

Tax Education and Citizen Training



Among other things, responsible citizenship must be based on criteria of coexistence that reinforce such values as justice, solidarity and cooperation, based, not only on respect and exercise of the rights, but also compliance with the obligations and commitments we assume as members of a community.

Democratic Coexistence

The contents for the development of Values and Democratic Coexistence of the individuals do not only originate in the School. Nevertheless, because of its public position, it is a privileged educating agent as regards moral education and citizenship.

Citizenship and Democracy are not merely identified with coexistence or patriotic feelings, nor are they simply reduced to formal terms of rights and obligations. Democracy may be understood as the procedure for political decision-making (democracy as form of government), and as a way of life that implies value options and a referee of standards and ideals.

We consider the development of a tax culture as a meeting point between the Development of Values and the exercise of Citizenship.

Toward a new Tax Culture

We believe that tax issues should constitute the transversal contents of teaching since they are constitutive elements of citizenship and are closely related to the incorporation of values and attitudes. The school may undertake actions aimed at a culture that may incorporate the ethical and civic value of taxation as one of those elements of responsible citizenship.

We deem it important to point out that Tax Education not only involves explaining to students why and for what purposes “are taxes paid”, but also developing attitudes of responsibility and commitment vis-à-vis the common welfare and the rules that govern coexistence. To achieve these objectives, one cannot and should not wait until citizens become adults, stage at which they already have “fixed” habits, preconceptions and internalized a specific idea as to “what is moral”.

Formal stages of the course – workshop with teachers

The courses are carried out in four days, wherein the conceptual bases are covered. Thereafter, a mixed modality is applied, with tutoring and individual work (reading of material, activities and planning design).For the approval of the course, teachers must submit and uphold in a meeting, a teaching plan stating the contents of TE with the specific aspects of the curricular area. Once the individual project has been approved, it is implemented in the classroom and as closing of the training activity, there is an exchange of experiences.

Instructional materials All the teachers participating in the course receive free instructional material for their own training, for their students, as well as a set of instructional games.

The Student’s Booklet is based on the experiences of a group ofkids and provides for reflections and activities in relation to citizenrights and responsibilities. The Teacher’s Module conceptuallyreinforces his learning during training and guides his work asregards the implementation of the activities and tasks with the group of students. The contents of the instructional materials are updated and revised,



taking into account the new requests and contributions of the teachers. This allows for arriving at a sound product which, at the same time is coherent with the needs arising from the educational area.

Since the inclusion of games in the teaching-learning task is a strategy that facilitates adaptation of the contents and a more active participation of the students, we produced table games with tax, customs and social security contents to provide instructional tools that would enrich teaching. For example, in the game called “The Citizen’s Treasure”, the board simulates a city where one must deposit the contributions in the Treasury for the maintenance of the public institutions. Another game is “Tour of the Country” wherein the children must represent by means of drawings or mimicry, values, elements of citizenship, economic activities or taxes.

2.3 Teacher Training for the Polymodal Level (2nd Cycle of Teaching for 15-17 year old students) and Training of Trainers

In the past year, we have had initial training experiences in these teaching levels. In the province of Mendoza we gathered professors from the polymodal levels, who teach in centers oriented toward Economics and Organizations Management. A total of 50 teachers participated and their contributions (that were included in the evaluation on impact) are being incorporated in the training device to be used in conducting the courses this year.

Another area of intervention is the teacher training institutes. In this respect, we conducted two workshops (in the provinces of Formosa and Misiones) where the teachers, as a condition for their approval, had to elaborate proposals for curricular updating and the training of teachers. This evaluation instrument served a double purpose: that the teachers, based on the needs and their own productions, were able to incorporate the contents of tax education in the local curriculum. On the other hand, that they, through allocations of funds from the ministry, could extend their training experiences to their peers.

2.4 Curricular updating

The incorporation of Tax Education contents in school curricula is a desirable and necessary condition, although not sufficient to ensure the maintenance of the subject in educational institutions.

The reform of the Argentine educational system delegated to the Ministries of Education of the provinces, the power to design and implement their own curricular contents, by taking into account a series of general guidelines elaborated by the country’s Ministry of Education. This situation requires that the incorporation of new contents within those designs, be undertaken at the local level. Although there is receptiveness for analyzing the issue, it is not an easy task to introduce changes in the formal contents and up till now, we have had relative success in this respect.

When a specific decision is made to act on the issue, the production of documents for the curricular updating is undertaken jointly with the technical teams of the educational area of each province

We believe that the final inclusion in the curricula of the Tax Education contents is one of the actions requiring in-depth consideration and an effort for increasing the institutional exchanges with the different ministries. However, while this transfer is achieved, there are no obstacles to continuing with the teacher training workshops and related activities that allow the gradual insertion of issues dealing with tax awareness.



2.5 External Evaluation of Formal Education Actions

In view of the level of development of the Program, we considered it convenient to count on an external evaluation that would allow us to make corrections or improve the proposal.

To this end, the Federal Administration signed an agreement with the School of Humanities of the University of Buenos Aires, under which one may find the Bachelor of Science in Education career and which also has a well-known technical consultancy service.

We asked this academic institution to examine:

the teacher training devise, the instructional materials produced, andthe impact of teacher training.

Thus, the University undertook the external evaluation of our strategies and contributed ideas to strengthen the actions.

In evaluating the impact of teacher training an evaluation was made, on the one hand, of the course per se, (objectives proposed and achieved, the role of trainers, etc.), and on the other, the analysis of the impact which the program generated at different levels (classroom, institutional, family and perception of AFIP’s institutional image).

Shown below are the main conclusions of the Impact Report:

The impact of the Program at the school level was positively evaluated.The course was very favorably evaluated, with over 9 points in a scale from 1 to 10. There is a high level of adequacy between the objectives proposed and compliance therewith.The performance of AFIP trainers was considered very adequate by 70 % of those trained.The level of satisfaction achieved by the instructional materials exceeded 9 points; while it is pointed

out that they favor classroom work.The evaluation of the implementation of the projects within the classroom context exceeded 8 points. 80% of those consulted incorporated the contents of tax education in the following year’s planning.The weight with respect to the application of the project in the institutional context is close to 8 points.Teachers indicate that there is greater “tax awareness” in the institution. As the impact “outside the institution” (family group, reference community) is evaluated, the score

is reduced as compared to the other spheres.With the holding of the course, the teachers recover a more “humane” look of the institution,

particularly by including the tax issue in the development of values and in the structuring of a democratic citizenship.

Much in the same way as the teachers that were part of the sample evaluated, the instructional materials were also examined by the Faculty’s research team. In this case they made a series of specific observations with respect to certain situations that occur in the field of contemporary ethical reflection. In general terms, the evaluation made by this group of professionals coincides with the evaluation made by the teachers with respect to the impact.



In order to improve the design still being elaborated, of a training device for the polymodal level (comprises adolescents of 15-17 years of age), the UBA team produced, based on certain guidelines given by the Tax Education unit, specific instructional materials for said level, emphasizing the areas of: History, Ethical and citizen development, Economics and Geography.

3. NONFORMAL EDUCATIONAL ACTIONS

After consolidating the central aspect of the Program, the actions were aimed at taking a qualitative jump of a greater impact, for which reason strategies were diversified in order to directly reach the child population.

The development of a new tax culture requires the implementation of different mass dissemination strategies that aimed to include the subject in the areas of cultural consumption of children and adolescents. As we said, the school is the privileged area of socialization and transmission of knowledge, but it is not the only one. The development of subjectivities also takes place in other spheres and it is adequate to insert oneself therein, following the development of innovative and effective tools as a necessary complement to the tasks involved in school mediation.

The massive attendance of children to these sites and the comments received, indicate that these modalities reinforce systematic actions and contribute to disseminate tax education. Each of them is briefly described below:

3.1 Game Areas

Island of inventions (Rosario – Prov. of Santa Fe)

This is a cultural center for children (which adults also enjoy) where we recently inaugurated “The Ideal City” module where the public present discusses and makes group decisions about the composition of that city’s budget. The project includes the development of two other modules: one linked to Customs and its role of privileged witness in determining the identity of the city of Rosario, very linked to its port. The other is related to the Social Security, which is depicted as a toy factory from the logic of a playful production.

Itinerary: game area (La Plata – Prov. Bs. As.)

In a large estate, the buildings of a Republic (Executive, Legislative, Judicial Bodies, banks, museums, etc.,) are reproduced at scale, although with an architecture of varied styles. In one of those buildings we constructed the Tax Education module, establishing a game itinerary that recreates the path of the tax money, the relationship between resources and public needs; the functions fulfilled by AFIP, the Congress of the Nation, the Ministry of Economy and other state institutions.

NonFormal Educational Actions

Game areas

Children’s Republic

Children’s MuseumTour of the country

Island of Inventions

Traveling Plays

At Ojotas

It happened at Villa Linda

Participation in Fairs



The development of this area was based on the need to revalue the social function of taxes, the exercise of responsible citizenship, the recognition of the rights and obligations of the citizens and the strengthening of the sense of ownership of the public space.

Children’s Museum (City of Bs. As.)

It is an interactive museum that reproduces the city space, where children play, imitating the adults (businessman; journalist; operator; etc.).

In this area we use the game modules “The paths of the treasure” and “The port and Customs Office”, whereby a reproduction is made of the path followed by public resources and the role performed by state institutions and the operation of the Customs Office in the port sphere.

Tour of the country: thematic exhibition (S. Clemente del Tuyú – Prov. de Bs. As.)

In a marine thematic park located in a resort area, we set up a space to exhibit our country’s natural and cultural heritage. Families as well as school groups visiting it, had the opportunity to see how the State, with public resources contributes to preserve the Argentine natural reserves and cultural heritage.

3.2 Traveling Plays

At Ojotas I and II

During the vacation season and for the second consecutive year, we organized a play that is presented throughout the resorts of the Atlantic coast based on TE issues.

It Happened at Villa Linda

A puppet show for smaller children was also presented at different public areas in the city of Mar del Plata.

3.3 Participation in Fairs

We set up stands with several games and entertainments where children participate in various cultural and educational activities. We had a special participation in the Children and Juvenile Book Fair in the City of Buenos Aires for two consecutive years, with an attendance of over 400,000 people. In this way, we endeavor to be present in each province’s most important cultural event for children.

3.4 Presence in mass communication media

We are aware that mass communication media is a means for disseminating cultural issues to children, especially television

to which they devote a greater part of their free time. Last year we entered into an agreement with a television production company to include contents in a children’s program conducted by a hostess who is well known among the children population.

NonFormal Educational Actions

Mass communication

media

TV programs

Children reviews

Tax Education Web Page

Virtual games



We sponsored a program developed by the Ministry of Education “ScopicMedia”, to make children aware of the development of new communication technologies. The programs are broadcasted during the school time allotted the children to work.

We deal with different citizen issues in an educational television program, by introducing such topics as contraband, underground work, payment vouchers, cooperatives, financing of public places, etc.

3.5 Publications in children reviews

In collaboration with well-known cartoon writers, we have developed comic strips that are published weekly in children reviews, which also include games, riddles and other activities that may arouse the child’s interest on the subject.

3.6 Tax Education Web Page

We developed an agile and entertaining page intended for children, teachers and the public in general. It shows games, instructional sequences, concepts of tax culture explained to children and teachers, information on the activities we carry out I different areas of the country.

3.7 Virtual games

The trends in children’s cultural consumption indicated that there was an exponential increase in the time children devote to play in their PCs. In all of the country’s cities there has been an increase in premises devoted to providing Internet services, especially to play on-line.

The elaboration and development of a virtual game will allow us to bring the subject to children from an instrument with which they are familiar. We are working on the initial technological requirements and other specific guidelines for the interactivity of the game. In this sense we are going to promote the use of this product with educational mediation.

4. COMBINED ACTIONS

Under this category we are considering the strategies that have been implemented and originated outside the school but which require the school sphere in order to be carried out.

4.1 Contests

This area is mainly intended for students in middle level schools, which we have not yet fully covered from the perspective of the training of teachers. Up till now we have held successful contests in some provinces.

My Invoice, Please

This contest is intended for students in their last year of the polymodal cycle. Its objective is to instill in adolescents the habit of requesting payment vouchers, understood within the framework of exercising a responsible citizenship.

My Invoice, PleaseCreativityAFIP Contest – Billiken

Combined Actions

Contests

AFIP goes to School



This contest is carried out in the Province of Mendoza during the school year and this year, 2005, we will be holding the third version, with the participation of the provincial Directorate of Income.

In the year 2004, a total of 98 schools participated, which in turn implied the participation of approximately 30,000 students.

Creativity

It recognizes creativity in the design of advertising, whose slogan in the first version held in 2004 was “why is it worthwhile to pay taxes”.

It was held in 5 provinces with over 600 divisions of students in their next to last year of the polymodal system of public schools.

4.2 AFIP goes to School

This is carried out at schools in the city of Buenos Aires, by means of different playful-educational activities and delivery of materials fo the in-depth consideration by teachers and students of tax education issues in classroom work. This is another of the actions that combines workshop activities with the presentation of plays dealing with responsible citizenship issues.

PRELIMINARY CONCLUSIONS

The external evaluation of Formal Education actions and opinion surveys undertaken by the administration on Nonformal Education actions confirm that we are on the right path.

We had previously said that a new Tax Culture could not be separated from Democratic Coexistence and the Development of Values. We cannot disregard the fact that, at present, what prevail is that which is contingent, critical, where the focus is not beyond short term objectives. We believe, without losing sight of the foregoing, that our contribution and our goals must be long-term oriented. Cultural changes occur within long periods and in the transformation processes the school plays an essential role. It is true that a culture cannot be changed merely from the school, but it is no less true that it cannot be changed without it.

One last consideration with respect to Tax Education actions is that certain “accessory benefits” are derived therefrom. In this sense, two that are closely associated are worth noting:

The first contact which this large part of the population (the children) have with the Tax Administration is “friendly”, linked to learning and playing. And that experience in many cases, is not forgotten: children work in an area with a visible presence of AFIP or receive quality instructional material. The social image we endeavor to develop around us is that of an institution that serves everyone and invites us to participate in a common area.

The parents and teachers who come in contact with the proposal say that they had never imagined that the Tax Administration is ALSO that. In general, they are pleasantly surprised that we take time to think and act within long term; that we attempt to change an aspect of our culture that may allow us all to live in a better country.



Our intention, considering the perspectives of Tax Education, is to expect that within a few years, in Argentina and in Latin America we will no longer need to work in developing tax awareness.

Perhaps those who are currently children and adolescents may find “sense” in a citizen practice such as the payment of taxes and may fulfill their obligations not only because of the risk involved in not doing so, but rather because this act will make them feel as citizens in the full sense and participants in what is common to the society of which they are a part.



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