Argentina - Second Tax Administration Project

 ICRR 10492 Report Number : ICRR10492 ICR Review Operations Evaluation Department 1. Project Data : OEDID : OEDID: L3460 Project ID : P006034 Project Name : Second Tax Administration Project Country : Argentina Sector : Economic Management L/C Number : L3460-AR Partners involved : Prepared by : Anwar M. Shah, OEDCR Reviewed by : Laurie Effron, OEDCR Group Manager : Ruben Lamdany, OEDCR Date Posted : 08/20/1999 2. Project Objectives, Financing, Costs and Components : Objectives: To (a) increase tax revenue through enhanced efficiency in tax administration; (b) sustain revenue enhancement; and (c) facilitate voluntary compliance through increasing popular perception of equity of the tax system. Financing: World Bank Loan US$20 million; Argentine Government US$10 million Cost: US$31.9 million of which equipment: US$20 million; and consultants: US$5 million 3. Achievement of Relevant Objectives : The project objectives were partially achieved . According to figures in the IMF International Financial Statistics, the central government revenues as a percent of GDP have remained in the range of 12 to 13 percent since 1993, which is when the project started up . If social security contributions are included, they have declined since then . On the other hand, there is some evidence that the tax collection has become more efficient and the tax evasion has decreased and voluntary compliance increased . 4. Significant Achievements : With computerization of tax collection, unit collection costs have declined . 5. Significant Shortcomings : Studies dealing with institutional reform issues and assessing citizens' perceptions were dropped . 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev .: Partial Modest The OED rating of 'modest' is equivalent to the ICR rating of 'partial'. Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Bank performance was, however, only marginally satisfactory as the project experienced serious delays, performance was deficient, and Bank supervision was relatively passive. Borrower Perf .: Deficient Unsatisfactory Equivalent rating. Quality of ICR : Satisfactory 7. Lessons of Broad Applicability : (1) Efforts on tax policy reform and tax administration reform must be closely coordinated . Without such a coordination isolated reform effort in each of these areas is likely not to be successful . (2) The long term success and sustainability of tax administration reform requires a focus on fundamental institutional reform . 8. Audit Recommended? Yes No 9. Comments on Quality of ICR : The ICR is satisfactory, although marginally so . It provides a good discussion of project history and is forthcoming about some weaknesses in project implementation, but presents an incomplete record and misleading comparisons (see para. 12, p.4) on project performance related indicators . The relevant measure of whether tax revenues increased is the trend between 1993 and 1997. These figures are not clearly presented in the ICR . In addition, relevant tables are missing: key indicators (including a comparison of appraisal estimates and actuals in cost reduction as in the SAR, paras. 2.38- 2.43; Table II.3; Annex 4; and project performance indicators in Annex 6); project financing; staff missions (timing, duration, expertise). The latter data would have been particularly useful in getting a clearer picture of Bank supervision, which was considered by the ICR to be less than satisfactory .