Evaluation of Tax Administration Efficiency: Data Envelope Analysis (DEA)

Abstract

Tax administration is essential for every country. Only with collected taxes, governments able to provide public services to citizens (taxpayers) and to implement welfare programs. Therefore, comprehensive performance measurement of tax administration is an important element of the overall assessment of the tax system in every country. The African Tax Administration Forum (ATAF) is already addressing this issue in its annual African Tax Outlook (ATO) publication by using three indicators (the tax-to-GDP ratio, tax-to-Total tax revenue ratio, and changes in nominal revenue collected) in terms of revenue collected across five types of taxes (VAT, PIT, CIT, customs duties, and the excise duties). This study complements the analysis of tax administration’s efficiency by using the Data Envelopment Analysis (DEA).