Interim project evaluation, increased revenue for development

Evaluation covers the period 4/79-3/81 and is based on document review and interviews with project personnel. The project is progressing satisfactorily and is only slightly behind schedule. Over 75% of tax office managers and technicians have been trained -- 22 in tax collection techniques; 36 in advanced auditing techniques; five by the U.S. Internal Revenue Service; and over 50 in work simplification and communication. Additional training in tax liability audit techniques is badly needed. Some tax files have been modernized, but records are still inadequate due to use of a British tax system which requires no tax return if a taxpayer agrees with the government assessment. With the assistance of a tax advisor, a system to control the accounts of delinquent taxpayers was developed but implementation was delayed when tax records were transferred to the Ministry of Finance. A universal tax identification numbering system, essential to more accurate tax assessments, has not been developed. Detailed procedural manuals for collectors are being used and short-term advisors are scheduled to prepare manuals for inspectors and office managers. Standardized forms and letters, a management information system, and procedures for clearing business transactions have been devised; nonpayment of tax penalties is being reported; and a taxpayer education and information program has been created. An internal audit unit is still being planned. The project was hindered by the absence of short-term advisors during the second year, constant shortage of personnel, lack of data, and managers' failure to use sanctions to enforce compliance with tax laws. Tax revenues grew 7.2% (adjusted for inflation) during 1979-80 and 22.3% in 1980-81. National economic growth and changes in the rates and bases of various direct taxes have not been, but should be, included in final estimates of revenue effects. However, because irregular annual fiscal flows make it is impossible to measure the project's contribution to development, the target of a l5% annual increase in revenue should be deleted as a stated goal.