2025 Public Sector Perspectives

Institutional capacity Strengthening institutional capacity is fundamental for effective tax revenue collection. Strong institutions foster transparency, simplify tax processes, and build public trust, all of which are essential for improving compliance and increasing tax revenues. Governments must cultivate systems where transparency and accountability are central pillars of revenue collection. Policy ideas include frequent publication of government budgets with detailed breakdowns of expenditure and revenues, governance frameworks for taxation authorities to ensure transparency, and the use of technology tools and procurement management to aid collection. In addition, reviewing government spending across departments, linking personal taxes directly to government programs for welfare and education, and engaging citizens through community oversight boards can enhance public trust and participation in taxation. For instance, Rwanda has enjoyed a sustained increase in tax collection over the past 30 years due to its governance and anti-corruption reforms, including intensive collection efforts, thorough auditing procedures, and close scrutiny of large taxpayers. The Rwandan Revenue Authority has spearheaded these successes, while there have also been administrative reforms such as land records systems. Simplifying filing procedures for both individuals and corporations can reduce the complexity of tax regulations. This can be achieved through legislation that promotes flat rates and limits exemptions. Tax collection systems should also be modernized to address advancements such as digital services. Digitizing tax forms and automatically populating repeat information can save time and encourage compliance. Estonia is a good example of this, with high levels of public trust – 38% of Estonians report moderate to high trust in the national government. 1 This goodwill is partly due to the country’s institutional regulations and the work of its National Audit Office, which monitors budget expenditures and fights disinformation. Estonia consistently ranks high on the Tax Foundation’s tax competitiveness index. By ensuring fair and consistent application of rules, governments can build public confidence. This includes having a detailed external review process to assess tax evasion by individuals and firms, and making all tax reforms and laws easily accessible and written in plain language. In Georgia, after the 2003 Rose Revolution, the new administration launched tax reforms and anti-corruption initiatives. Tax and customs agencies were merged, a Revenue Service was established, and major tax infrastructure was upgraded. A revised tax code simplified the system, and by 2008, the tax revenue-to-GDP ratio had roughly doubled. 2 Most recently, in 2022, an Anti-Corruption Bureau was created to further anti-corruption policies and oversee political financial activities. 1 https://www.oecd.org/en/publications/oecd-survey-on-drivers-of-trust-in-public-institutions-2024-results-country-notes_a8004759-en/estonia_767c2818-en.html 2 https://www.imf.org/en/Publications/fandd/issues/2018/03/akitoby Strengthening institutional capacity is fundamental for effective tax revenue collection. Strong institutions foster transparency, simplify tax processes, and build public trust , all of which are essential for improving compliance and increasing tax revenues. 48 Tax Revenue Mobilization, Public Finance Management and Global Best Practices