Civil society engagement in facilitating tax policy

Executive Summary

Tax systems are fundamental to governance. They critically influence governments’ fiscal capacity, allowing states to fund essential public services. Tax systems can also increase government accountability to citizens, strengthening the compact between citizens and the state. The role of civil society in strengthening this citizen-state compact has increasingly gained interest among researchers, practitioners, and funders. Historically, the role of civil society organizations has been conceptualized as contributing to the debate on the adoption of better tax policies related to both domestic and cross- border resource mobilization. Once a tax policy is adopted, however, the central challenge is fair and efficient implementation. Revenue authorities may not have the legitimacy or capacity to administer
the tax regime, and taxpayers may not comply.

This paper seeks to address the question: What role might organized civil society have to play in facilitating equity considerations in tax administration? This is a question around which there is emerging evidence and a need for a robust agenda of future research. This role for civil society has recently been highlighted by the Addis Tax Initiative’s commitment to “enhance the space and capacity for accountability stakeholders” (Addis Tax Initiative, 2020). At the same time, there is little consensus on what meaningful implementation of such a role could look like.

The Transparency and Accountability Initiative (TAI) commissioned IDinsight to provide a synthesis of this emerging evidence and highlight promising areas for investigation. As a part of this exercise, we first map key stakeholders and their potential interactions in the tax ecosystem. This mapping allows us to identify what roles civil society can play when working towards equitable and accountable tax administration. The roles, or points of entry, entail fostering transparency between citizens and tax administration, mobilizing taxpayers, facilitating their participation, and engaging state actors for a more equitable tax administration. For each of these roles, we synthesize findings from the literature and our interviews with selected researchers, practitioners, and funders and propose areas for further investigation.