Tax administration reform in transition: the case of Croatia

This Occasional Paper reports the research results of a project on the tax administration in Croatia conducted by the Institute of Public Finance in Zagreb for the Croatian Tax Administration. The project team report was finalised in summer 1997 and it includes ten papers which are published in Croatian in the Institute’s journal “Financijska praksa”, Volume 22 , Number 1-2 (April 1998). This paper is the summary of the project written by Katarina Ott (Institute of Public Finance)

Making Government Work

For a city or state government to be viable in the last decade of the 20th century, elected leaders must view modern management as a crusade. The work force must receive fair and equitable compensation, and all must be committed to constant quality improvement. Newspapers, magazines, radio and television must report the success stories and the failures. Taxpayers must understand that government services can improve, and the leaders must be held accountable. This is possible throughout the country but it will not happen unless an educated electorate demands it and the elected officials understand the stakes and urgency involved

The Promise of Priority Review Vouchers as a Legislative Tool to Encourage Drugs for Neglected Diseases

Despite the intellectual property system’s success in promoting the economic well-being of the United States, this system has not achieved all socially valuable ends. Insufficient treatments are applied both to diseases endemic in developing countries, such as malaria, and rare diseases, such as rare childhood cancers. Several legislative tools aim to promote socially valuable drugs and biologics through market incentives. The priority review voucher (PRV) program is the latest and most unique of these legislative tools aimed at encouraging the development of drugs for neglected diseases without burdening taxpayers. The Creating Hope Act—recently signed into law as part of the Food & Drug Administration Safety & Innovation Act—extends the PRV program to rare pediatric diseases. This Issue Brief argues that some provisions in this new legislation may result in undesirable collateral effects that could prevent the legislation from fulfilling its objective of encouraging investment in treatments for rare pediatric diseases

Rewarding Honest Taxpayers: An Experimental Assessment

Shrinking budgetary allocations for tax enforcement at the U.S. federal level have placed an unprecedented premium on low cost policies that promote voluntary tax compliance. In other jurisdictions, tax administrators have experimented with rewarding taxpayers for voluntarily complying with tax laws, but there has been an absence of reward-focused policy experimentation in the United States. To explore the efficacy of rewards among U.S. taxpayer populations, a multi-period online tax reporting experiment was conducted featuring a simple reward intervention: a token monetary amount pre-announced and provided to participants who were audited and found to have fully complied. The reward failed to increase average post-audit compliance levels as compared to the no-reward control condition, regardless of whether random audits or non-random (i.e., conditional on past detected evasion) audits were used. However, the reward treatment condition in combination with random audits was strikingly effective with respect to an alternative measure of tax compliance: “consistent compliance,” or the outcome in which a participant voluntarily reports all of her income in each and every period of the experiment. When used in conjunction with random audits, the reward treatment caused consistent compliance to rise by 89% as compared to the no-reward control condition (statistically significant at the 5% level). These results suggest that pairing token monetary rewards with random audits may help maintain taxpayers’ commitments to voluntary compliance over time. Such findings may justify conducting field experiments to better understand the effects of reward programs on real-world taxpayer populations

GRANTSMANSHIP AND CONSULTING POLICY: DISCUSSION

Teaching/Communication/Extension/Profession,

Pathways for School Finance in California

Simulates school finance reforms to equalize core program funding rates, shifting categorical programs to unrestricted support, raising funding for high-poverty districts, and adjusting regional rates. Focuses on special education and Economic Impact Aid

Risky Business

This article is part of an exchange including Anthony Alfieri and William Simon in the Georgetown Law Journal on the implications of law firms\u27 increasing reliance on the concept of risk management as the focus of efforts to ensure ethical conduct by lawyers. A risk management program involves the adoption of various policies and procedures designed to minimize conduct that may lead to individual and firm liability. Conflicts checking procedures, standard terms in engagement letters, and the requirement of a second signature by a disinterested partner on legal opinions are but a few of such measures. On one hand, the risk management paradigm reflects appreciation of the importance of situational incentives and pressures in shaping behavior in organizational settings. This is an advance over conceptions of legal ethics that assume that behavior is principally a function of individual character. Law firms are now major business enterprises, and their systems of rewards and sanctions, as well as their cultures, necessarily influence the conduct of those who work in them. Attending to the ways in which these influences can reinforce or discourage certain types of behavior can help firms establish and maintain environments that enhance the likelihood that lawyers will act ethically. On the other hand, a risk management approach risks inculcating an instrumental view of legal and ethical provisions. To the extent that it conceptualizes ethics as a matter of avoiding liability, risk management may foster the attitude of Holmes\u27s bad man, who cares only for the material consequences which . . . knowledge [of the law] enables him to predict. The bad man wants to avoid punishment, but has no commitment to legal compliance as a good in itself. This can lead to an impoverished view of law and ethics, in which the choice of behavior is contingent on the costs and benefits of a given course of action. This tension in the risk management model has been examined in the context of corporate legal compliance programs, and law firms may draw useful lessons from that research. Social psychologists and management theorists have identified complex connections among program characteristics, group dynamics, individual perceptions and motives, and employee behavior in the business setting. In particular, they have suggested that instrumental and values-based programs proceed on different premises and contribute to compliance in different ways. Instrumental programs can be effective by affecting employee cost-benefit calculations, while values-based programs can foster appropriate behavior because the employee identifies with the values that this behavior expresses. Scholars suggest that compliance programs with both dimensions generally are necessary, but integrating them into a single program requires careful consideration of how they may interact. The article closes by suggesting that this research on corporate programs may offer useful insights for law firms. It cautions, however, that applying this research will need to take account of the ways in which law firms both resemble and are different from typical business corporations

Enforcing International Corrupt Practices Law

This Essay strives to advance the current international movement todeter the transnational corrupt practices that have long burdened the global economy and weakened governments, especially in “developing” nations. Laws made in the last decade to address this longstanding global problem have not been effectively enforced. Described here are the moderately successful efforts in the United States since 1862 to reward private citizens serving as enforcers of laws prohibiting corrupt practices. It is suggested that this American experience might be adapted by international organizations to enhance enforcement of the new public international laws