Accountability for performance : the case of a tax administration

Abstract

Improving public sector managers' accountability with performance measurement is one of the dominant themes of the New Public Management (NPM) literature. With a case study of HM Customs & Excise (HMCE), this PhD research analyses NPM-inspired accounting changes using evidence from interviews with HMCE personnel, official publications and parliamentary reports. There are four important research findings. First, unlike other service delivery organisations, two sets of competing accountability relationships exist in a tax administration, which are operationalised by two performance measurement regimes. This necessitates adaptation of leading private sector performance measurement models to accommodate the duality. Second, HMCE used accounting as a change vehicle in an attempt to shift emphasis from a traditional, compliance-driven accountability relationship to a customer-focus driven one. Third, the compliance-driven relationship remained the dominant relationship in practice despite implementation of the first round of customer-focused accounting changes. Fourth, a second round of accounting changes, i.e. a tax gap reduction approach, attempts to harmonise the two competing performance measurements. This arguably represents a notion of shared accountability of taxpayers and tax administration for 'tax gap' reduction. From an institutional theory perspective, however, adoption of the tax gap approach represents an exercise to (re)gain legitimacy in the eyes of Government. The PhD evidence, therefore, suggests that success of accounting changes is context specific. Moreover, based on a notion of reciprocity of accountabilities in the public sector, the PhD research also develops a theoretical framework. This is a significant contribution as existence of multiple accountabilities is recognised in the literature but using accounting changes to shift emphasis from one accountability form to another is not well addressed. In addition to these theoretical contributions, this PhD research is a first field study of PMS of a tax administration, and therefore, also improves our understanding of managerial issues of a neglected, but important, research site