Managing the Reform Process

1
Managing the Reform Process
2
Approaches to Tax Reform

• Public economics
• Macroeconomic
• Administrative
• Political

3
The Process of Tax Reform

• Policy formulation
• Policy authorization
• Policy implementation

4
Policy Authorization

• Legislative independence?
• Closed or open process?

5
Policy Formulation Institutionalization

• Better packaging
• More flexibility
• Better defense
• Better control

6
Policy Formulation Key Components

• Information
• Analysis
• Planning

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Policy Formulation Location

• Tax administration
• Ministry of Finance
• Other

8
Policy Formulation Timing

• Sporadic
• Continuous

9
Example Indonesia

• Issue definition
• Ownership
• Timing
• Scope

10
Example Indonesia (2)

• Administrative aspects
• Political aspects

11
Example Colombia

• Gradualism
• Duration
• Education

12
Example Transitional Countries

• Initial conditions
• Complementary reforms
• Perspective
• Policy and administration

13
Lessons from Developed Countries

• Champion
• Package
• Visible benefits
• Adequate discussion

14
Lessons from Developing Countries

• Timing
• Simplify
• Sequencing
• Scope

15
Lessons from Bank Experience

• Systems view
• Transition

16
Wisdom from the Fund

• Clarity
• Details
• Incrementalism
• Politics

17
The Key Questions

• What
• How
• Who
• When

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The Main Lesson

• Tax reform is mainly about politics