Rule of Law Reform and Development

Rule of Law Reform and Development

Charting the Fragile Path of Progress

Michael J. Trebilcock and Ronald J. Daniels

This important book addresses a number of key issues regarding the relationship between the rule of law and development. It presents a deep and insightful inquiry into the current orthodoxy that the rule of law is the panacea for the world’s problems. The authors chart the precarious progress of law reforms both in overall terms and in specific policy areas such as the judiciary, the police, tax administration and access to justice, among others. They accept that the rule of law is necessarily tied to the success of development, although they propose a set of procedural values to enlighten this institutional approach. The authors also recognize that states face difficulties in implementing this institutional structures and identify the probable impediments, before proposing a rethink of law reform strategies and offering some conclusions about the role of the international community in the rule of law reform.

Chapter 6: Tax Administration

Michael J. Trebilcock and Ronald J. Daniels

Subjects: development studies, development economics, law and development, economics and finance, development economics, law and economics, law - academic, law and development, law and economics

Extract

I. Normative Benchmarks We focus on tax administration in this chapter as a proxy for the administrative apparatus more broadly, which, as a whole, we believe represents an important element in the institutional matrix. We do so for two reasons. First and foremost, tax administration is an example of a specialized law enforcement or regulatory function which all developing countries must perform (unlike less ubiquitous specialized law enforcement and regulatory agencies in, e.g., telecommunications and public utilities sectors, environmental protection, occupational health and safety, and competition policy). Second, for reasons we elaborate below, we believe that there is a particularly strong correlation between good tax administration and development. Although it is difficult to identify the specific institutional and legal characteristics of “good” tax administration, an evaluation of the development and tax literature suggests a tentative list of normative criteria. Effectiveness and efficiency can be promoted by focusing on: simplicity; costs; voluntary tax compliance; self-assessment; effective enforcement; independent or semi-autonomous tax authorities; automation; and large taxpayer units. These normative criteria, and their individual links to development through the fiscal and rule of law channels, are explored in this chapter. There is no universal definition of “tax administration” although several common understandings have been advanced. Tax administration includes activities relating to the ascertainment of tax liability, the collection of the tax, and the settlement of tax disputes and imposition of penalties for violation of tax laws. This encompasses a wide range of action on the part of tax authorities. Ascertainment of tax...

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