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DDTC Working Paper 0213

                                                     Figure 1 - Analytical Framework

                                           Economic Level

                                         Economic Structures
                                            and Activities
                      Tax Revenue                                                                   Governance
                                          Institutional Factor  SEMI AuTONOMOuS REvENuE AuThORITy

                                                                                                  Democracy (Polity)

                   and  stand-alone  institution,  SARA  is  expected  to   In  some  countries,  SARA  has  been  proved  for
                   be more focused in their duties, it can effectively   improving tax  performance;  however, in other
                   manage its affairs, free from political interference   countries, adopting SARA does not impact on the
                   in daily activities,  and execute  management    productivity of tax  revenue.  The  ambiguous
                   strategies  that  can  boast  human  resources  (HR)   results clearly unable to convince the policy makers
                   independently  (ranging  from  recruitment,  retain,   to immediately adopt institutional SARA for their
                   dismiss or to motivate HR). 7                    tax authorities.
                      Myths  and  realities  of  the  benefits  of  SARA   3. Research Methodology
                   basically can be seen  through  experiences  in
                   several countries. Most of the existing literatures
                                                                       In  order  to  test  the  myths  of  impact  of  SARA
                   attempt to formulate indicators  appropriate to
                                                                    model to tax  performance and other  relevant
                   evaluate the performance of taxation  before and
                                                                    indicators,  we utilize econometric  approach.
                   after  the  implementation  of  SARA  models.  The
                                                                    Please note that the criteria for SARA used in this
                   indicators used  in the evaluation  generally still
                                                                    paper refers  to data  that  is originally published
                   have weaknesses in measuring quantitatively the
                                                                    by  the  OECD ,  ADB ,  Mann , and Taliercio .
                   implications  of  the  adoption  of  SARA,  especially
                                                                    Basically, SARA, according to those authors, refers
                   when it tries to measure the performance  in the
                                                                    to the authority and power possessed by the tax
                   form of tax  staff, culture, tax corruption, and so
                                                                    authorities rather than on the structural position
                   on. Therefore, it is not surprising that, rather than
                                                                    of the agency (separately or is under the Ministry
                   evaluate studies on the evaluation of the impact of
                                                                    of Finance or Ministry of the other equivalent).
                   SARA usually tends a survey on public perception. 8
                                                                       Our hypothesis is that with more autonomy in
                      One  of  the  previous  studies  that  try  to  find
                                                                    tax  administration  will  positively impact  the tax
                   relationship between tax  revenues and other  tax
                                                                    revenue performance as consequences of effective
                   performances  with  the  application  of  the  SARA
                                                                    and  efficient  tax  administration.  Further,  we  also
                   system is only study held at  the sub-national
                                                                    think that there are specific indicators which may
                   government level in Peru.  This study showed that
                                                                    drive the decision to be more or stagnant autonomy
                   local governments that are adopting SARA models
                                                                    (see out analytical framework on Figure 1)
                   can better mobilize stabel tax revenue.
                      In essence, it can be stated that the assessment
                   of the implementation of SARA is still perplexing.
                                                                    11 For example, SARA model applications in African countries. Most of
                   and Manuals (Juni 2010): 2                       those countries are still facing non-compliance problem as well as steady
                   7 William Crandall dan Maureen Kidd, “Revenue Administration:   tax ratio.
                   Autonomy in Tax Administration  and the Revenue Authority,”  IMF   12 OECD,  OECD Tax Administration 2013: Comparative  Information
                   Technical Notes and Manuals, (2010): 8           on OECD and Other Advanced and Emerging Economies (Paris: OECD
                   8 Survey conducted by IRAS in 2011 showed better tax services reaching   Publishing, 2013), 29.
                   95%.  In 1992, tax authority in Singapore changed its form from Inland   13 Asian Development Bank, “Institutional Arrangements for Tax
                   Revenue Department (IRD) to Inland Revenue Authority of  Singapore   Administration in Asia and the Pacific”, the Governance Brief Issue 19
                   (IRAS). Please see Asian Development Bank, “Institutional Arrangements   (2012).
                   for Tax Administration in Asia and the Pacific,” ADB Governance Brief   14 Arthur Mann, “Are Semi-Autonomous Revenue Authorities the Answer
                   Issue 19, (2012): 6                              to Tax  Administration Problems in Developing  Countries? A  Practical
                   9 Please see Christian von Haldenwang, Armin von Scholler, dan Melody   Guide”, USAID Review for Fiscal Reform in Support Trade Liberalization
                   Garcia, “Tax Collection in Developing Countries – New Evidence on Semi-  Project (2004).
                   Autonomous Revenue Agencies (SARAs)”, 31 July 2012.  15 Robert Taliercio Jr., “Designing Performance: The Semi-Autonomous
                   10 Maureen Kidd dan William Crandall, “Revenue Authorities: Issues and   Revenue Authority Model in Africa and Latin America” World Bank Policy
                   Problems in Evaluationg Their Success”, IMF Working Paper WP/06/240   Research Working Paper 3423, (2004)
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