Ever more frequently, the news media echo the increased perception of corruption in Latin America, as evidenced in surveys such as Latinobarometro or in data periodically presented by Transparency International. In addition, the issue is  being considered in greater depth. For example, recently the IMF calculated the cost of corruption as 1.5 per cent of the GDP and called the attention regarding the direct impact on tax collection and business investment decisions.

Vis-a-vis this situation, we should ask ourselves what can the tax administration –TA- do with respect to external corruption. Another relevant data that should lead us further to reflection. Between 1999 and 2017, the tax administrations detected only two percent of bribery cases.

If we would go through the mission statement of the different tax administrations –TAs- the common denominator is to achieve voluntary tax compliance by improving the taxpayer attention and assistance services and the struggle against tax fraud or evasion. It is thus obvious that there are legal –jurisdictional- limitations regarding the treatment of confidential data and of human and material resources availability. It is also clear that the level of participation of the TA in the struggle against external corruption depends on each country’ juridical and institutional framework, as well as of the interrelationships with the institutions qualified for such purpose.

A greater involvement of the TA in this respect would be based on the fact that, in general terms, the TAs have enormous amounts of information from very varied sources (from the taxpayer himself, from those who are economically or financially related to him, from the public registries, financial institutions, other administrations, etc.). Moreover, they also have the possibility of massive treatment and use of these enormous amounts of information from the standpoint of the technology available, as well as the capacity of the public officials specialized in analyzing this information and in the investigation of economic operations, tax fraud and tax offenses.  In addition, the strong connection between tax and corruption offenses vouches for this possibility, to the extent that corruption and the citizen’s perception of corruption erode and very negatively affect the improvement of voluntary tax compliance.

As arguments contrary to this greater proactivity, one should note the natural trend of the organizations to act, if not independently, at least autonomously, the scarcity of human and material resources that conditions the TAs performance which, on many occasions renders it difficult for them to achieve their objectives. In addition, they face the enormous pressure of the political bodies for increasing tax collection from year to year and must also adapt themselves to the continuous technological changes.  Likewise, officials or agents are reluctant to carry out functions that may go beyond the regular performance of their profession or traditional tasks, and there is also the fact that corruption practices are neither reflected nor explained in fiscal, accounting or banking documents –thereby adding many difficulties to their investigation and persecution. -.

Between these two extremes, one can glimpse room for cooperation with the pertinent institutions in the struggle against corruption which will be ever more effective to the extent it is related to the TA’s main mission and accordingly, with the fiscal aspects related to corruption^[1]. In this area of cooperation, there are mechanisms and instruments that may and should be reinforced for arriving at a more effective response that may overcome the current weaknesses. Taking for granted the strong political support this issue demands, the basic requirements for a more effective cooperation model would be:

• The existence of entities specialized in investigating corruption.
• The promotion of teamwork of a multidisciplinary and highly specialized nature.
• The preparation of protocols, intervention guides and sound procedure manuals that may favor communication between the different entities in charge.
• Promoting international cooperation and exchange of information and mutual assistance agreements.
• The availability of adequate technical tools and infrastructures.
• The reinforcement of systems for the filing and follow-up of accusations.

As we have said, the foregoing statements endeavor to raise a reflection –more than ever necessary- regarding the role of the TAs in the struggle against this moral flaw. They were brought up at the CIAT Permanent Committee on Ethics whose recent meeting was held in Havana last May 24. The results of a survey answered by 15 CIAT member countries were presented at said meeting. It evidenced the existence of opportunities to achieve greater cooperation from the entities directly in charge of investigating and going after these offenses, for improved training of the auditing staff so that they may be better prepared for the necessary and obligatory reporting of corruption cases to those entities or for promoting joint or coordinated operations with them.

The Ethics Committee –wherein different CIAT member countries participate- shall continue working now under the leadership of the Tax Agency of Spain to reinforce the ethical performance of the tax administrations and the implementation of integrity frameworks and values.

The Committee’s working documents may be consulted in the Ethics Committee section of the CIAT web.

[1] “Reflexiones: La Corrupción y las administraciones tributarias”. Colección Experiencias nº 2. CEDDET Foundation, instructional materials and conclusions prepared and coordinated by Jesús Gascón Catalán in Course of the Network of Experts in Public Finance.

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