Public Sector Governance and Accountability Series: Budgeting and ...

392 Salvatore Schiavo-Campo
systematically include a report on questionable major bulk purchases made
during the previous fiscal year. Naturally, uprooting corruption in the ministry
of finance itself is fundamental.
Taxation
In domestic taxation, the problem of corruption may be masked by the
apparently reasonably good “fiscal marksmanship”on the revenue side (that
is, the close correspondence between revenue actually collected and revenue
forecast at the beginning of the fiscal year). The forecasts of tax revenue may
appear reliable both in relation to previous years’ revenue and in relation to
tax revenue actually collected. However, the right question when looking at
public financial corruption is not whether actual revenue is close to the
estimated amount, but whether it is reasonably close to the potential revenue
that should be collected on the basis of the tax rates and the profile and
number of taxpayers. Sometimes, even the number of taxpayers is not
known with certainty. Such ignorance is convenient, because it precludes the
estimation of potential tax revenue and hence permits avoiding the question
of whether actual revenues are anywhere close to the potential—and, if not,
why. In these cases, the first reform priority is to conduct a comprehensive
census of all taxpayers and, on that basis, to reestimate potential tax revenue.
The taxpayers’ census and the results of the estimates of potential revenue
should be made public and should include disaggregation of the potentialactual
revenue gaps between the different forms of taxation and between
different groups of taxpayers. The focus should first be on large taxpayers. A
second necessary reform is to introduce a single identifying number for
taxpayers, to combat tax evasion.
Customs
In customs, the main tried-and-true corruption techniques are falsification
of certificates of origin, deliberate misclassification of the imported item
into a lower-tariff category, abuse of exemptions and exonerations, outright
manufacture of false documents, and underinvoicing of exports. Even a
cursory look at the volume of imports and their composition will help
reveal a large undershooting of customs revenue officially collected. This
particular set of problems is very persistent, and corruption in customs is
an especially hardy weed.
The single most effective anticorruption measure would be to drastically
reduce the exemptions regime and make the tariff rate structure more
uniform. Other avenues of improvement may include reducing individual
discretion by greater use of electronic technology. However, the introduction