A Guide to Open Government and the Coronavirus: Tax
Recommendations | Examples | Resources | Partners | Back to Main
Prior to the COVID-19 crisis, it was widely recognized that countries must have adequate taxPlacing transparency, accountability, and participation at the center of tax policy can ensure that burdens are distributed equitably across society. Technical specifications: Commitments related to c... revenue to achieve the sustainable development goalsOGP countries are experimenting with open government innovations to accelerate progress on the Sustainable Development Goals, particularly SDG 16+ which includes peaceful, just and inclusive societies... – from addressing issues of poverty and equity to providing educationAccountability within the public education system is key to improving outcomes and attainment, and accountability is nearly impossible without transparent policies and opportunities for participation ..., sanitation, and avoiding catastrophic climate effects. In the context of COVID-19, responses to the economic, social, and, sometimes political effects are being addressed not only through spending, but also through changes in revenue collection such as tax holidays or deferments. Even without changes in tax policy, enforcement and administration, there will be major changes in revenue structure as the amount of revenue collected shifts – whether that is in property, wealth, income, international trade, or consumption.
The motivations for improving tax and finance are interrelated.
- Capacity: The potential benefits for state-building and improved service-delivery across sectors;
- Sovereignty: Independence from foreign and multilateral development assistance;
- Democracy: Taxation regimes encourage public demand for performance and better democracy (often referred to as the “tax bond” or “social fiscal contract”);
- Equity: Ensuring that taxation is fair and supports pro-poor development;
- Competitiveness: Supporting efficient markets by rewarding innovation over tax evasion and regulatory capture;
- Solvency: Balance sheets allow for sustainable management of debtOpenly disclosing information about government debt enables informed decision-making, mitigates the risk of financial instability, and allows citizens to hold their governments accountable for respons... More and delivery of services.
Approaches to dealing with these issues include:
- Improving tax administration;
- Improving policy to ensure equity in tax burden and efficiency in administration;
- Improving tax enforcement and reducing tax evasion;
- Improving tax morale.
Because a strong COVID-19 response will require massive financial mobilization and changes in tax policy, it presents a huge chance for policy capture, shifting of tax burdens, and even fraud. Weaving transparencyAccording to OGP’s Articles of Governance, transparency occurs when “government-held information (including on activities and decisions) is open, comprehensive, timely, freely available to the pub... More, accountability, and participation throughout changes to tax policy (even if temporary) can help to resolve these issues. Without transparency, it is difficult to assess the distributional impacts of policy changes. Without participation, tax policy and administration will fail to represent the broadest spectrum of interest groups. Without accountability, it is difficult to identify where and when there has been maladministration or illegal preference shown to certain parties.
This guide provides recommendations to strengthen transparency, accountability, and participation in tax policy and administration in the context of COVID-19. For related policy recommendations see the sections of this guide on fiscal openness, public procurement, and social safety nets.
Recommendations |
Open Response Open response measures place transparency, accountability, and participation at the center of immediate government efforts to curb contagion and provide emergency assistance. The following recommendations are grouped into three categories, according to whether they strengthen tax equity, improve the efficiency of tax administration, or address tax enforcement and evasion. All three categories are relevant to both the open response and open recovery phases of pandemic response. Equity Tax equity is essential to building a strong foundation for future economic resiliency. Equitable tax policies ensure that tax burdens are fairly distributed across a society. Tax policy changes can mitigate or worsen the economic inequality that has been deepened by the COVID-19 pandemic. Issues of equity go beyond policy; enforcement (see below) is also critical to ensuring equity.
Open Recovery and Reform Open recovery measures place transparency, accountability, and participation at the center of medium-term government efforts to rebuild in the wake of COVID-19. Similarly, open reform initiatives ensure that the public is at the heart of government in the post-pandemic world. Efficiency (Tax administration) Global economic decline and decreasing government revenue demonstrate that efficient tax administration is more important than ever. The following recommendations seek to reinforce efficient tax administration in the COVID-19 context.
Enforcement and evasion Significant amounts of money may be sheltered from lawful collection. Some of this activity may take the shape of tax minimization or avoidance of regulationGovernment reformers are developing regulations that enshrine values of transparency, participation, and accountability in government practices. Technical specifications: Act of creating or reforming ... by citizens and companies, while other efforts are outright corruption, embezzlement, or organized crime. Evasion results in equity issues as well as inefficiencies in the market and in other distortions. The following areas can help bridge the gap between needed revenue and currently collected revenue.
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Examples |
The following examples are recent initiatives in response to the COVID-19 pandemic and are drawn from our crowdsourced list as well as partner materials.
The following examples are commitments previously made by OGP members that demonstrate elements of the recommendations made above. Tax administration
Beneficial ownership
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Resources |
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Partners who can provide further support and information |
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Thank you to our partners at Tax JusticeTo address barriers that prevent citizens from having their justice needs met, OGP participating governments are working to expand transparency, accountability, and inclusion into all systems of justi... Network and the International Budget Partnership for sharing recommendations and reviewing this module.
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