On October 29-30, 2019, the Federal Ministry of Finance (BMF), the International Monetary Fund (IMF), the World Bank, and the JVI hosted a high-level conference on building more effective tax systems by adopting the MTRS approach to tax system reform. The event was held in Vienna at the Austrian Federal Academy of Finance, and was opened by then Finance Minister Edward Mueller and IMF Fiscal Affairs Department Director Vitor Gaspar. Senior officials from the ministries of finance and revenue authorities from almost all of the JVI countries participated.
The logic of the MTRS approach consists in building a broad consensus on a country’s medium-term revenue mobilization goal to finance the development agenda, notably its spending needs, and then designing an effective plan to transform the tax system—policy, administration and tax legal framework—to achieve this goal. Typical horizons for reform plans of this nature are 5-10 years, which could be done in phases with 4-6 years in the first phase. Achieving a high level of voluntary tax compliance is an integral component of a successful MTRS, as is a robust legal framework which balances revenue agency powers and taxpayer rights, in the context of self-assessment tax system.
One key highlight of the conference was the need to ensure a whole-of-government approach in leading the tax system reform. It was underscored as a success factor for recognizing political and social challenges in creating broad consensus and sustaining political support during tax system reform implementation. It was also clear that external support from a variety of multilateral and bilateral partners can be an important element of a successful MTRS reform, but such support has to be well-coordinated and well-aligned to countries tax system reform plans.
The conference agenda is available here. The IMF and the World Bank, along with OECD and UN in the context of the Platform for Collaboration on Tax, plan to continue building support for the MTRS approach though upcoming conferences and capacity development support to countries.
At the JVI, we hope to support stronger tax systems with a new BMF course set to take place in September 2020, for which applications are now being accepted.
Thomas Richardson, Director, JVI