• Public sector

Public sector & corruption

This paper reviews corruption in revenue administrations and outlines some practical steps to minimise the problem. Tax and customs authorities are frequently among the most corrupt institutions in many countries, and corruption in revenue administration can take many forms, including:

• systematic – where individuals act together, to systematically support evasion (usually driven by senior staff)
• individual corruption, where staff either have ‘clients’ whom they facilitate illegally or where they simply exploit their positions for financial gain

Integrity is a key requirement for revenue administrations and considerable effort is needed to tackle the challenges encountered. These challenges relate to:

• the external environment - cooperation across government institutions is vital if revenue corruption is to be tackled, and includes collaboration with the harbour authority, immigration, border police, the economic crime agency, and the ministry of finance
• staff management - good human resource management starts with transparent recruitment procedures based on qualifications, which are vital to overcome nepotism or persons ‘buying’ positions, a common problem for revenue services in many countries due to the potential for lucrative interactions with clients
• facilities and equipment for staff -the revenue administration should provide the equipment that staff need to perform the job
• business procedures -all procedures in the revenue administration should be fully documented in procedure manuals and/or desk instructions, specifying both what is required and what is not required or permitted
• internal investigation - it is crucial to have effective and skilled internal investigation teams with the sole purpose of conducting internal investigations

The paper argues there is no golden key to solving integrity related difficulties in revenue administration. An essential part of any donor support programme should be the development and implementation of an integrity plan. Reforming revenue administration is also a social and political process driven by human behaviour and local circumstances. It is often a long and difficult transformation that requires civil servants and politicians to change the way they regard their jobs and responsibilities, including their tasks and their interaction with citizens.

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