The Fair Tax Monitor (FTM) is a unique evidence-based advocacy tool that identifies the main bottlenecks within tax systems and provides strong evidence for advocacy work at national and international level. The tool allows for a comparison of tax policies and practices in different countries, using a standardized methodology and unified research approach thanks to jointly developed common research framework. The 2016 pilot edition relies on data and analyses presented in the country reports from Bangladesh, Pakistan, Senegal and Uganda.
  • 2015
MAP
SCORECARD

2015
  • PROGRESSIVE TAX SYSTEM
  • SUFFICIENT REVENUES
  • EFFECTIVE TAX ADMINISTRATION
  • PRO-POOR PUBLIC SPENDING
  • ACCOUNTABLE PUBLIC FINANCES
  • WELL GOVERNED TAX EXEMPTIONS
FTM focus countries
other CRAFT countries
0-2
3-4
5-6
7-8
9-10
unfair
fair
2015 PROGRESSIVE TAX SYSTEM SUFFICIENT REVENUES EFFECTIVE TAX ADMINISTRATION PRO-POOR PUBLIC SPENDING ACCOUNTABLE PUBLIC FINANCES WELL GOVERNED TAX EXEMPTIONS
PAKISTAN
6
7
9
6
5
6

The main challenge Pakistan is facing is a narrow tax base. It needs to be broadened through documentation of the economy and an effective information management system as well as a robust enforcement infrastructure so that the tax evaders are made accountable to pay their due taxes. It is also crucial to lower the burden of indirect taxation on the poor.

Pakistan obtained a relatively high score for revenue sufficiency because it has improved revenue collection in various ways during the last three years. However, Pakistan's total tax revenues are still below 10% of GDP and are amongst the lowest in the world.

The tax authority has consistently improved over the years, however, it has failed to adopt a long term approach to ensure a sustainable stream of tax revenues and to bring more tax payers in the tax net. Although heavy investments have been made into digitalizing the tax system, the newly created technological platforms are not fully utilized.

Pakistan is not investing enough into its education and healthcare system, according to the international standards. Although the resources allocated to the basic services have been increasing in the past years, further efforts need to be made to meet the desired levels.

There is a very limited role of the civil society to participate in the formulation of the revenue policies as the government is not supportive of including citizens in the decision making process. Significant improvements need to be made in terms of information availability. The financial affairs of state owned enterprises in particular lack transparency.

Pakistan has an ambiguous and unfair constitutional structure with prevailing tax exemptions and preferential treatment given to specific sectors and elites of the society. The influential class of society create a legal space for exempting their income or set the tax rates of their own choices as a result of bilateral negotiations with the government, which ultimately burdens the poor. Fortunately, majority of such exemptions is to be withdrawn by 2016, which will have a positive impact on the tax system in Pakistan.

BANGLADESH
7
4
4
3
3
2

Bangladesh suffers from an extremely inefficient Value Added Tax system with many exemptions and rates. A new VAT and Suplementary duty Act will become effective in July 2016, which gives hopes for improvements. There is a necessity to introduce a reformed wealth tax system that would replace the current surcharge on wealth and that would create proper mechanisms to determine the true value of property and wealth of individuals.

Bangladesh's performance in tax revenue generation is very poor as the tax to GDP ratio stands below 10%, one of the lowest in the world. Although there has been certain improvement in raising the tax to GDP ratio and in bringing more tax payers into the tax net, it has not been enough to fulfil the country's potential.

Bangladesh's tax authority (NBR) suffers from an insufficient number of professional officers and although training programmes are in place, the skills of existing staff needs to be improved to properly tackle tax avoidance. The NBR also needs to adopt stricter measures to fight corruption.

There is an urgent need for Bangladesh to invest more into healthcare and education. The results show that it does not meet the international standards for neither healthcare nor education. There are no visible efforts to improve the situation as the investments into public services have not been raising in the past years. If citizens are to pay their taxes, the government must allocate more resources to improve the public services.

Bangladesh is lacking a meaningful mechanism to involve citizens in the policy making processes and provides only limited information about the tax system to the public. The government agencies need to ensure openness, reliability and timeliness of the tax related data and publish them in a user friendly manner. Without publicly available data on tax systems, it is difficult for the citizens and the civil society organizations to hold their government accountable.

Curbing tax exemptions and making sure that all existing exemptions are approved by the Parliament and open to public scrutiny are extremely necessary in Bangladesh. The key to more effective management of tax exemptions is likely to lie in reduced discretionary powers, total transparency about the beneficiaries of the tax exemptions and in a stronger mandate for the revenue authority to implement and monitor all incentives and exemptions. 

SENEGAL
5
6
8
7
5
7

The personal income tax system underwent a reform that was beneficial mainly for the high income earners as the highest tax rates were lowered, while the lowest were raised. Improvements are also needed regarding the corporate income tax as most revenues are collected from a small number of companies, reflecting a narrow tax base and concentration of the tax burden on a limited number of payers. 

Senegal's tax revenues are above 18% of GDP, which is the best performance in the East African Community. However, Senegal is losing significant revenues to tax exemptions (4% of GDP in 2012). This revenue lost needs to be reviewed if Senegal is to reach the level of revenue collection of the developed countries. 

The tax administration in Senegal is mainly concentrated in Dakar, which decreases the efficiency of tax collection in other regions. It also operates under different ministries, which makes it more complicated to manage and coordinate. The tax administration is relatively successful in collecting tax revenues, although the coverage of the tax system must be expanded further. 

Senegal meets the international standard for education spending set by the Incheon Declaration at 15% of the total tax revenues. It however needs to increase the expenditure on healthcare as the current spending is lower compared to the previous years.

In Senegal, various reforms have been passed to improve the transparency of the tax system (e.g. publication of revenues forgone due to tax exemptions). However, the changes are not fully reflected in practice. There is therefore a necessity to adopt a law ensuring access to information that would strenghten the citizens' rights to information.

Since 2008, Senegal publishes information about tax exemptions and the revenues lost, which makes the system very transparent. However, improvements are still needed in terms of timely publication of the data. To improve the management of the tax exemptions, they should be subject to a parliamentary oversight.

UGANDA
7
6
8
4
3
7

Uganda's VAT law has been reformed and as a result, a number of exemptions was removed, which is a welcome step towards simplifying the system. However, certain essential goods are now taxes with a regular VAT rate, whereas other, luxurious, goods, enjoy a lower rate, which does not contribute to the progressivity of the tax system. Uganda is also very dependent on the revenues from import and export taxes, which makes it vulnerable to external shocks. 

Uganda's tax revenue stagnated between 10 and 12% of GDP. The growing informal sector (accounting for almost 36% of the economy in the central region alone), excessive tax exemptions, unaccounted financial outflows (capital flight and illicit flows), alongside the tax administration gaps have contributed to low revenue collections. 

Uganda's effort to digitalize the tax administration is a driving factor to improving tax compliance. As a result, the tax payers' register has grown considerably in the past years. This has however created more pressure on the administration as the number of tax officers has not increased accordingly. Although the tax authority has seen an important improvements, the collected revenues are still far from sufficient (only 10 - 12% of GDP).. 

The government of Uganda has shifted public spending priorities in favour of infrastructural development, which poses a risk to already low investments into healthcare and education. Uganda thus does not meet the international standards for public spending on healthcare and education.

Tax authorities have begun to publish information through media and tax hubs, although the quality, integrity and relevance of the data is questionable. While such information could be important to ensure that the authorities are held accountable, the public remains disempowered to take any relevant action.

Uganda seem to be on the right path in creating a transparent framework for managing the tax exemptions. Discretionary exemptions were abolished in 1996 and information about the beneficiary companies and lost revenues is published. However, Uganda's revenue forgone to tax exemptions remains high (2% of GDP in 2013). 

0-2
3-4
5-6
7-8
9-10
unfair
fair
MAP
SCORECARD

2016
  • PROGRESSIVE TAX SYSTEM
  • SUFFICIENT REVENUES
  • EFFECTIVE TAX ADMINISTRATION
  • PRO-POOR PUBLIC SPENDING
  • ACCOUNTABLE PUBLIC FINANCES
  • WELL GOVERNED TAX EXEMPTIONS
FTM focus countries
other CRAFT countries
0-2
3-4
5-6
7-8
9-10
unfair
fair
2016 PROGRESSIVE TAX SYSTEM SUFFICIENT REVENUES EFFECTIVE TAX ADMINISTRATION PRO-POOR PUBLIC SPENDING ACCOUNTABLE PUBLIC FINANCES WELL GOVERNED TAX EXEMPTIONS
PAKISTAN
6
7
9
6
5
6

The main challenge Pakistan is facing is a narrow tax base. It needs to be broadened through documentation of the economy and an effective information management system as well as a robust enforcement infrastructure so that the tax evaders are made accountable to pay their due taxes. It is also crucial to lower the burden of indirect taxation on the poor.

Pakistan obtained a relatively high score for revenue sufficiency because it has improved revenue collection in various ways during the last three years. However, Pakistan's total tax revenues are still below 10% of GDP and are amongst the lowest in the world.

The tax authority has consistently improved over the years, however, it has failed to adopt a long term approach to ensure a sustainable stream of tax revenues and to bring more tax payers in the tax net. Although heavy investments have been made into digitalizing the tax system, the newly created technological platforms are not fully utilized.

Pakistan is not investing enough into its education and healthcare system, according to the international standards. Although the resources allocated to the basic services have been increasing in the past years, further efforts need to be made to meet the desired levels.

There is a very limited role of the civil society to participate in the formulation of the revenue policies as the government is not supportive of including citizens in the decision making process. Significant improvements need to be made in terms of information availability. The financial affairs of state owned enterprises in particular lack transparency.

Pakistan has an ambiguous and unfair constitutional structure with prevailing tax exemptions and preferential treatment given to specific sectors and elites of the society. The influential class of society create a legal space for exempting their income or set the tax rates of their own choices as a result of bilateral negotiations with the government, which ultimately burdens the poor. Fortunately, majority of such exemptions is to be withdrawn by 2016, which will have a positive impact on the tax system in Pakistan.

BANGLADESH
7
4
4
3
3
2

Bangladesh suffers from an extremely inefficient Value Added Tax system with many exemptions and rates. A new VAT and Suplementary duty Act will become effective in July 2016, which gives hopes for improvements. There is a necessity to introduce a reformed wealth tax system that would replace the current surcharge on wealth and that would create proper mechanisms to determine the true value of property and wealth of individuals.

Bangladesh's performance in tax revenue generation is very poor as the tax to GDP ratio stands below 10%, one of the lowest in the world. Although there has been certain improvement in raising the tax to GDP ratio and in bringing more tax payers into the tax net, it has not been enough to fulfil the country's potential.

Bangladesh's tax authority (NBR) suffers from an insufficient number of professional officers and although training programmes are in place, the skills of existing staff needs to be improved to properly tackle tax avoidance. The NBR also needs to adopt stricter measures to fight corruption.

There is an urgent need for Bangladesh to invest more into healthcare and education. The results show that it does not meet the international standards for neither healthcare nor education. There are no visible efforts to improve the situation as the investments into public services have not been raising in the past years. If citizens are to pay their taxes, the government must allocate more resources to improve the public services.

Bangladesh is lacking a meaningful mechanism to involve citizens in the policy making processes and provides only limited information about the tax system to the public. The government agencies need to ensure openness, reliability and timeliness of the tax related data and publish them in a user friendly manner. Without publicly available data on tax systems, it is difficult for the citizens and the civil society organizations to hold their government accountable.

Curbing tax exemptions and making sure that all existing exemptions are approved by the Parliament and open to public scrutiny are extremely necessary in Bangladesh. The key to more effective management of tax exemptions is likely to lie in reduced discretionary powers, total transparency about the beneficiaries of the tax exemptions and in a stronger mandate for the revenue authority to implement and monitor all incentives and exemptions.

SENEGAL
5
6
8
7
5
7

The personal income tax system underwent a reform that was beneficial mainly for the high income earners as the highest tax rates were lowered, while the lowest were raised. Improvements are also needed regarding the corporate income tax as most revenues are collected from a small number of companies, reflecting a narrow tax base and concentration of the tax burden on a limited number of payers.

Senegal's tax revenues are above 18% of GDP, which is the best performance in the East African Community. However, Senegal is losing significant revenues to tax exemptions (4% of GDP in 2012). This revenue lost needs to be reviewed if Senegal is to reach the level of revenue collection of the developed countries.

The tax administration in Senegal is mainly concentrated in Dakar, which decreases the efficiency of tax collection in other regions. It also operates under different ministries, which makes it more complicated to manage and coordinate. The tax administration is relatively successful in collecting tax revenues, although the coverage of the tax system must be expanded further.

Senegal meets the international standard for education spending set by the Incheon Declaration at 15% of the total tax revenues. It however needs to increase the expenditure on healthcare as the current spending is lower compared to the previous years.

In Senegal, various reforms have been passed to improve the transparency of the tax system (e.g. publication of revenues forgone due to tax exemptions). However, the changes are not fully reflected in practice. There is therefore a necessity to adopt a law ensuring access to information that would strenghten the citizens' rights to information.

Since 2008, Senegal publishes information about tax exemptions and the revenues lost, which makes the system very transparent. However, improvements are still needed in terms of timely publication of the data. To improve the management of the tax exemptions, they should be subject to a parliamentary oversight.

UGANDA
7
6
8
4
3
7

Uganda's VAT law has been reformed and as a result, a number of exemptions was removed, which is a welcome step towards simplifying the system. However, certain essential goods are now taxes with a regular VAT rate, whereas other, luxurious, goods, enjoy a lower rate, which does not contribute to the progressivity of the tax system. Uganda is also very dependent on the revenues from import and export taxes, which makes it vulnerable to external shocks.

Uganda's tax revenue stagnated between 10 and 12% of GDP. The growing informal sector (accounting for almost 36% of the economy in the central region alone), excessive tax exemptions, unaccounted financial outflows (capital flight and illicit flows), alongside the tax administration gaps have contributed to low revenue collections.

Uganda's effort to digitalize the tax administration is a driving factor to improving tax compliance. As a result, the tax payers' register has grown considerably in the past years. This has however created more pressure on the administration as the number of tax officers has not increased accordingly. Although the tax authority has seen an important improvements, the collected revenues are still far from sufficient (only 10 - 12% of GDP)..

The government of Uganda has shifted public spending priorities in favour of infrastructural development, which poses a risk to already low investments into healthcare and education. Uganda thus does not meet the international standards for public spending on healthcare and education.

Tax authorities have begun to publish information through media and tax hubs, although the quality, integrity and relevance of the data is questionable. While such information could be important to ensure that the authorities are held accountable, the public remains disempowered to take any relevant action.

Uganda seem to be on the right path in creating a transparent framework for managing the tax exemptions. Discretionary exemptions were abolished in 1996 and information about the beneficiary companies and lost revenues is published. However, Uganda's revenue forgone to tax exemptions remains high (2% of GDP in 2013).

0-2
3-4
5-6
7-8
9-10
unfair
fair